By Martin Crutsinger
WASHINGTON — Consumer prices shot up in July at twice the expected rate, pushed higher by surging energy and food costs. The latest surge left inflation running at the fastest pace in 17 years.
The Labor Department reported today that consumer prices rose by 0.8 percent last month, twice the 0.4 percent gain that economists had been expecting.
It marked the third straight month of oversized inflation increases following jumps of 0.6 percent in May and 1.1 percent in June. And it leaves inflation rising by 5.6 percent over the past year, the biggest 12-month gain since January 1991.
Core inflation, which excludes volatile food and energy costs, rose 0.3 percent in July, slightly higher than the 0.2 percent increase that economists had expected. For the past 12 months, core inflation has risen by 2.5 percent, the highest 12-month change since February.
The inflation surge presents a major problem for the Federal Reserve: Will inflation force it to start raising interest rates even as the economy struggles to avoid a recession?
The big rise in inflation left consumers even more squeezed. The Labor Department said that average weekly earnings, after adjusting for inflation, fell by 3.1 percent in July compared with a year ago, the biggest year-over-year decline since November 1990.
The Labor Department also reported that the number of newly laid off workers filing for unemployment benefits fell by 10,000 last week to 450,000. The decline was less than expected and showed the labor market remains under severe stress from the weak economy. The four-week average for claims rose to the highest level in six years.
The 0.8 percent rise in consumer prices reflected big increases for energy and food, a pattern that has been happening for months.
Energy prices jumped by 4 percent last month, driven upward by a 4.1 percent rise in gasoline prices. In July prices at the pump were=2 037.9 percent above where they were a year ago.
There could be some relief on the way, however, as gasoline prices, after hitting a record $4.11 per gallon nationwide in mid-July, have been falling in recent weeks. They now average around a nationwide $3.79 per gallon, according to the survey by auto club AAA and the Oil Price Information Service. The average Seattle area price is currently $4.01.
Crude oil prices are also down about $30 a barrel from a peak in early July and analysts are hoping that this decline will help relieve some of the pressures on energy costs.
Food costs shot up by 0.9 percent in July, reflecting higher costs for a wide variety of food products. Over the past 12 months, food prices have risen by 6 percent, reflecting surging commodity prices. The Agriculture Department reported this week that this year's corn and soybean harvests will be among the largest in history, though, easing fears that had been fueled after heavy flooding in the Midwest in June.
The core inflation figure was driven higher by a big 1.2 p ercent jump in clothing costs, the biggest increase in this area since August 1998. Airline ticket prices, which have been surging because of higher fuel costs, jumped another 1.3 percent in July.
WASHINGTON (AP) — The federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks.
The Treasury Department reported that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007.
The deficit outstripped the $97 billion gap that Wall Street economists had been expecting for July.
The Treasury said outlays were pushed up by $15 billion because of payments the Federal Deposit Insurance Corp. made to depositors at failed banks. The Treasury report did not identify the banks but federal regulators seized the assets of California-based IndyMac Bank, the largest regulated thrift to fail in U.S. history.
The FDIC is expected to be successful in recovering much of its outlays for failed banks, in part by selling the assets of seized institutions. The FDIC has also r aised the possibility that it will increase insurance premiums on healthy banks to cover the cost of what are expected to be rising bank failures as the current credit crisis unfolds.
Besides the payouts by the FDIC, government outlays were increased by the final bulk mailings of government stimulus payments in July. The July deficit also looked worse than the July 2007 deficit because last year's figure was artificially deflated by timing issues that shifted about $19 billion in normal outlays into the prior month.
So far this year, the budget deficit totals $371.4 billion, more than double last year's deficit through the same time period of $157.4 billion.
The Bush administration recently revised its forecast for this year's deficit, lowering it from an estimate of $410 billion, down to $389 billion. However, the Congressional Budget Office is more pessimistic, projecting the deficit for this year will total $400 billion when the current budget year wraps up on Sept. 30.
For the 2009 budget year, which begins Oct. 1, the administration is now projecting a deficit of $482 billion, which would be the highest in dollar terms in history, surpassing the old mark of $413 billion set in 2004.
Through July, government revenues total $2.094 trillion, down 1% from the same period a year ago. Revenues have been weaker this year, reflecting the sharp slowdown in the overall economy.
Government spending so far this budget year totals $2.466 trillion, 8.5% higher than a year ago. That's in part due to the $168 billion stimulus package Congress passed at the beginning of the year in an effort to keep the country out of a deep recession and because of increased spending for the wars in Iraq and Afghanistan.
Lagos (AFP)
E-waste from European, US and Japanese manufacturers is contaminating the environment around the sites where it is dumped for recycling and disposal in Ghana, Greenpeace said in a statement received Wednesday.
Greenpeace said it visited two scrapyards -- one at Abogbloshie in the centre of Accra, the main centre for recycling computers in Ghana, and one in the city of Koforidua in the country's Eastern Region.
The scientist in the team took samples from the open-burning sites at both locations as well as from a shallow lagoon at Abogloshie.
"Some of the samples contained toxic metals including lead in quantities as much as 100 times above levels found in uncontaminated soil and sediment samples," the Amsterdam-based environmental campaigner said in a statement.
The group also noted the presence in most of the samples of other chemicals such as phthalates, which interfere with reproduction, and in one of the samples of a high level of chlorinated dioxins, known to promote cancer.
"The nature and extent of chemical contamination found at these sites in Ghana is similar to that previously exposed by Greenpeace for e-waste open-burning sites in China and India," the group said.
It pointed to the fact that many of those working on the sites were children and noted that hazardous chemicals may be more dangerous to children than to adults.
The children are employed to retrieve metal parts, mostly made of either aluminium or copper, for sale.
Greenpeace said container-loads of old and often broken computers, monitors and TVs arrive in Ghana from Germany, Korea, Switzerland and the Netherlands "under the false lable of 'second-hand goods'".
"Unless companies eliminate all hazardous chemicals from their electronic products and take responsibility for the entire lifecycle of their products, this poisonous dumping will continue," Martin Hojsik, Greenpeace International toxics campaigner was quoted as saying.
"Electronics companies must not allow their products to end up poisoning the poor around the world," he said.
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