Consumer prices jump
Rise in gas, goods and services has analysts worried about inflation
According to local and national data released Wednesday, consumer prices saw their biggest jump in months in April — led once again by gas prices, but also evident in an array of goods and services. The news sent stocks tumbling, and analysts voiced concern that the Federal Reserve might keep pushing interest rates up to fend off inflation.
"The whiff of inflation is feeling more like a gust," said Richard Yamarone, economist at Argus Research. "The inflation picture is worsening."
Wells Fargo Bank reported a 0.4 percent increase in its April Wasatch Front Cost of Living survey, while the U.S. Labor Department said its closely watched Consumer Price Index rose a seasonally-adjusted 0.6 percent, the biggest jump in three months.
On Wall Street, the Dow Jones industrial average sank 214.28, or 1.88 percent, to 11,205.61, a one-month low. The Dow slid as much as 245.51 points earlier and logged its biggest single-session slide since falling 307 points on March 24, 2003.
The Standard & Poor's 500 index lost 21.76, or 1.68 percent, to 1,270.32, its lowest since finishing at 1,262.86 on Feb. 13; the Nasdaq fell 33.33, or 1.5 percent, to 2,195.80, showing a loss for the first time in 2006.
"I think that we are at a point where, seemingly, we're just not going to be able to go on with life as it is without any repercussions," said Kelly K. Matthews, executive vice president and economist at Wells Fargo. "And those repercussions will be evident in terms of mortgage rates, housing demand and the amount of retail sales."
Matthews and other economists said Wednesday's inflation report raises the odds for another rate increase at the Fed's next meeting, June 28 and 29.
The Labor Department report said energy prices shot up 3.9 percent in April, the most since January. Gasoline prices jumped 8.8 percent, while fuel oil prices went up 5.2 percent. Airline fares rose 1.6 percent, the most in nine months. Hospital and other related services climbed 0.8 percent, the most in two months. Clothing prices increased 0.6 percent. Education costs, including tuition and books, rose 0.5 percent.
Locally, transportation costs jumped 1.1 percent, while the cost of housing increased 0.8 percent, according to the Wells Fargo report. The price of groceries rose 0.6 percent. The only decrease was in the price of clothing, which dropped 3.6 percent. All other price categories were unchanged.
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