Uh-Oh

U.S. consumers got hit with a 9.2% inflation rate in June, year on year, according to yesterday's consumer price index from the Bureau of Labor Statistics. We all know that paying more than $4 per gallon for milk and for gas is a shock to the pocketbook. The cost per pound of bread in June was $1.37 compared with a $1.19 at the same time last year. Some produce prices also climbed higher, with red delicious apples at $1.25 per pound compared with $1.11 a year ago.  Banana prices were 63 cents per pound compared with 50 cents per pound a year ago. Tomato and lettuce prices were virtually the same as a year ago and navel orange prices were off substantially, the BLS reports.

Here is a link to some coverage of this new round of "stagflation." From AP:

The Labor Department said wholesale inflation, driven by skyrocketing gas and food costs, rose by 9.2 percent for the 12 months ending in June -- the fastest pace since the summer of 1981, during another energy crunch.

At the same time, consumers hit the brakes hard despite a massive infusion of government stimulus checks. Retail sales turned in their poorest showing in four months.

Federal Reserve Chairman Ben Bernanke delivered a somber midyear outlook to Congress, saying the U.S. faces "numerous difficulties" despite the Fed's interest rate-cutting campaign, which began last September in hopes of preventing a recession.