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US inflation fastest since 1991 | US inflation fastest since 1991 |
(10 minutes later) | |
US prices rose by 5.6% in the year to July, the fastest inflation rate for more than 17 years, figures show. | US prices rose by 5.6% in the year to July, the fastest inflation rate for more than 17 years, figures show. |
The rate of inflation was much greater than economists had predicted, driven higher by the 30% increase in energy prices during the period. | The rate of inflation was much greater than economists had predicted, driven higher by the 30% increase in energy prices during the period. |
Food costs were 6% higher than a year earlier, the figures showed. | Food costs were 6% higher than a year earlier, the figures showed. |
The price rises are squeezing consumers further. Inflation-adjusted average weekly earnings fell by 3.1% in July compared with a year earlier. | |
Despite the high inflation figure, economists predict the rate will begin to slow from next month as a result of recent falls in the oil price. Oil reached a record high of $147 a barrel in July but has fallen significantly since. | |
"[Inflation] is certainly above expectations here, but I think we've probably seen, for the near-term anyway, the worse of the inflation readings," said Keith Hembre, chief economist at First American Funds. | |
Gary Thayer from Wachovia Securities agreed: "If we don't get an unexpected shock that pushes commodity prices back up, this might be the worst inflation news that we'll get for a while." |
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