Consumer inflation accelerates in Nov.

[swag]

Source: MarketWatch

WASHINGTON (MarketWatch) - Consumer prices rose 0.8% in November, led by higher prices for gasoline, the Labor Department reported Friday. This is the fastest pace of consumer inflation in more than two years.

But energy wasn't the entire story. Prices of apparel, drugs, and airline fares also spiked.

As a result, core inflation, which excludes food and energy prices, rose 0.3%, the biggest gain since January.

The figures raise concern that inflationary pressures are increasing, and could limit the room for the Federal Reserve to cut interest rates to counter the expected economic slowing over the next few quarters.

Read more: http://www.marketwatch.com/news/story/consumer-inflation-accelerates-nov/story.aspx?guid=%7B1F346596%2DFCB3%2D4D7F%2DA3FB%2D0494A9B9C16D%7D

[FreeStateDemocrat]

1. Hard to believe Fed cut interest rates with inflation starting to be finally reported.

Everybody knew inflationary pressures were increasing but the official rate has masked that reality, so it must be really bad if it’s finally being documented. With only a 2.3% Social Security COLA increase for next year the puke’s are throwing SS recipients to the wolves. These kinds of numbers will really hurt retirees making ten to fifteen thousand a years a year who will have to chose between food and energy costs not to mention deal with their increase in Medicare charges.

[Tempest]

3. The economy is in a damned if you do, damned if you don't predicament

Can't keep cutting interest rates, but current rates are dragging down the economy.

Things are going to get a lot uglier next year.

[Zynx]

4. If the government came in and actually bailed out the financial system

just to free up the credit markets once again, the Fed would have room to fight inflation. I know bailing out the banks is unpopular, but a hurting banking system hurts us all, not just rich people.

[Tempest]

9. Bailing out the banking system isn't really an option either

Bailing out the system means borrowing the money and investors in government treasury bills will want a higher rate of interest since they've become riskier.

It will also cause the dollar to drop in the currency markets and oil prices will rise to make up the difference.

[Zynx]

11. The dollar will drop more on economic weakness.

I posit the following example of currencies and how they trade: Brazil in 2002 and 2003 had very high interest rates, a weak economy, and a weak currency. Since that time they have been generally slashing interest rates(except in 2005 when they raised them to curb inflation) and the real has been the best performing currency in the last several years. The reason is that a stronger economy boosts demand for assets denominated in that currency. Interest rates and deficits have less to do with currency strength than attractiveness of the economy. The budget deficit needed to bail out the banks is small potatoes compared to the spill over damage. I would say that inaction will cost the government more in lost revenue due to lower economic activity than the bail out would cost.

[CountAllVotes]

2. kick!

:dem: :kick:

[yorkiemommie1]

5. $4.76 for 10 medium tortillas

Inflation? I guess!

x(

[alfredo]

6. $3.29 for a gal of milk. I'm on SS, inflation hurts.

[tridim]

7. No joke, what's the deal with tortillas?

They're just flour/corn and water.

I used to get 12/$1.00, now it's at least double that.

[closeupready]

8. Basically, more corn is now being used to produce ethanol,

so demand is higher whereas supply has remained static, as far as I know. Ergo, the price rises.

[Tempest]

10. The price of flour tortillas is up too

I'm paying 70 cents more from a few months ago for the brand I buy.

[Toots]

12. If only the Fed can hold off raising rates for one more year

Then when a Democrat becomes President the rates will sky rocket and our Debt expense will escalate to the point of ridiculousness and the Democrat will be blamed..They tried it with Clinton but he was way too smart for them. He actually started paying down the debt and put the USA on a major road to recovery. Right now with Interest rates at their lowest rate in half a century we still pay more in interest on our debt than all social programs combined. Think what is going to happen when they start to go up as they are destined to do..America is in dire straights and no one wishes to address the issue..Where is Ross perot when our country really needs him?