July 17, 2008
The already struggling US economy took another turn for the worse after it emerged that American consumers are experiencing a period of “intense” inflation after prices soared at the fastest annual rate in 17 years on the back of the rising price of oil and food.
The US consumer price index rose 5pc on a year-on-year basis, its highest rate since May 1991, a rate more than douible the US government’s 1.5pc-2pc target range.
Prices jumped 1.1pc in June, the second highest increase since 1982 – and the highest since 2005 during the aftermath of Hurricane Katrina. Stripping out food and fuel costs, inflation rose by 0.3pc.
The inflation numbers were compounded by a separate US Labour Department report that showed that salaries are declining. The average weekly earnings of US workers fell 0.9pc in June on an inflation-adjusted basis
The news is the latest blow to the American economy, which has already seen more than 1m homes repossessed as a result of the sub-prime mortgage scandal and unemployment at 5.5pc.