US inflation up on higher tobacco prices

| August 17, 2011 | 0 Comments

Figures from the US Labor Department have revealed US wholesale price inflation rose last month on the back of rising tobacco and light motor truck prices.

According to the Labor Department, the cost of finished goods rose 0.2% in July, with fresh fruit, beef and veal all attributing to pushing up the rate of inflation.

However, the main reason was the 2.8% gain in tobacco prices, while disruption from the Japanese earthquake pushed the cost of light trucks up 1%.

In the meantime, the core inflation rate (which strips out volatile food and energy costs) rose 0.4% in the month – double the rate analysts had expected.

Federal Reserve chairman Ben Bernanke has insisted, however, that the prices increases are temporary and inflation will fall back.

Despite rising inflation, the US central bank has opted to keep interest rates at range of zero since December 2008 and earlier this month said rates will stay low until 2013.

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