Gas, food spur inflation jump in 2007I'm not a math guy; my Ph.D.'s in philosophy. But it seems to me that, if consumer prices rose "4.1 percent for all of 2007," and wages dropped 0.9 percent, the net loss to the average worker was close to 5 percent.
By MARTIN CRUTSINGER, AP Economics Writer Wed Jan 16, 5:50 PM ETWASHINGTON - Consumer prices rose in 2007 at the fastest pace in 17 years as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills. However, falling prices for clothing and new cars offset some of those gains.
The Labor Department reported that consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006. Both energy and food prices jumped by the largest amount since 1990.
Prices were also up sharply for health care, housing and education. However, these gains were offset somewhat by falling prices for clothing, new cars and computers.
Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures.
For December, the Consumer Price Index rose by 0.3 percent, slower than the 0.8 percent jump in November, as food costs were flat for the month and energy prices rose by 0.9 percent after an even bigger 5.7 percent jump in November. Outside of food and energy, core inflation rose a more moderate 0.2 percent in December.
The rising risk of a recession has prompted politicians to consider stimulus packages to give the economy a jump-start to either prevent a recession or at least mitigate its fallout. President Bush has said he may unveil a plan around his Jan. 28 State of the Union address. Democrats in Congress and presidential candidates in both parties are putting forward their own plans.
The 4.1 percent increase in overall prices last year was the biggest since a 6.1 percent jump in prices in 1990.
Overall energy costs rose by 17.4 percent this past year while food costs rose by 4.9 percent. Both were the biggest increases since 1990. Gasoline prices were up 29.6 percent, the biggest increase since they soared by 30.1 percent in 1999.
Tell me how can a poor man stand such times and live?