Stagflation will not be happy news for Bernanke
Prices rose in August – by 0.4%, eliciting some concern by economists about the possibility of stagflation – a combination of economic stagnation coupled with inflation.
The U.S. Bureau of Labor Statistics reported this number alongside a 3.8% annual inflation rate.
This seasonally-adjusted increase in the all items index was broad-based, with continued increases in the indexes for gasoline, food, shelter, and clothes.
Prices at the pump rose for the 12th time in 14 months and were the fastest growing item, leading a 1.2% increase in the energy index. The food index also rose 0.5%, its largest increase since March of 2011.
With energy and food stripped out, the index grew by 0.2% in August, with most items registering an increase. The exception was new cars, whose prices remained unchanged.
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