US Consumer Prices Surge Amid Inflation Concerns | Voice of America - English
U.S. consumer prices jumped by one-point-one percent in June, the second largest increase in prices in 26 years. The surge is largely attributed to soaring energy prices, which rocketed upward by six percent.
Thebigger than anticipated rise in prices is cutting deeply intoconsumers' buying power, with average weekly wages, adjusted forinflation, falling by zero-point-nine percent. The surge in energycosts is also trimming business spending and hurting economic growth. Speakingto the House Financial Services Committee, Federal Reserve Chairman BenBernanke said inflation is a threat to hopes for an economic recovery. "Inflationhas remained high, running at nearly a three-and-a-half percent annualrate over the first five months of this year, as measured by the priceindex for personal consumption expenditures. And, with gasoline andother consumer energy prices rising in recent weeks, inflation seemslikely to move temporarily higher in the near term," he said. Bernanke said consumers and businesses alike are likely to be cautious with their spending. ACommerce Department report shows that Americans cut back on purchasingcars, furniture and restaurant meals last month as the cost of gasolinesoared. Analysts say the current economic situation puts the centralbank in a difficult position, because it may not dare to counterinflation by raising interest rates at a time when the U.S. economyremains weak, and global financial markets are under stress. Askedat Wednesday's hearing if the U.S. economy is in a recession, Bernankesaid that will be determined later by economists. But he said there isno doubt that many Americans are facing tough times right now. "Whetherit's a technical reception or not is not all that relevant. It'sclearly the case that for a variety of reasons families are facinghardships in terms of higher energy costs, declining wealth, all thethings that you mentioned, so this is clearly a rough time," he said. Despitethe bleak forecast by Bernanke, U.S. stocks rallied late Wednesday. The Dow Jones industrial average climbed about two percent as oilprices declined slightly and Wells Fargo Company issued upbeatquarterly results, easing concerns about the banking sector.