Gas Lifts Consumer Costs but Not Enough to Alarm Fed

According to an article published in the Wall Street Journal today, consumer prices have rose the most in four years last month due to an increase in fuel costs. Energy prices have mounted 5.4% after a three month decline; the surge in gasoline prices accounting for approximately three-fourths of this gain. This recent development has caused gasoline prices to hit a four month high of $3.78 a gallon and increase the price of food by 0.1% yet there has been a 0.7% increase in industrial output which is offsetting concerns of inflation by the Federal Reserve.  

The influx of money by the FED as of late has stimulated the economy; resulting in a stronger U.S. dollar but raising concerns of higher pricing. The FED now projects the rate of inflation to stay between 1.3% and 2% this year; dramatically lower than the 2.5% they have set to begin raising interest rates. The FED must be confident in their current monetary policy and unconcerned about the recent sequester cuts dampening economic growth.

Evan Chang

Source:

http://online.wsj.com/article/SB10001424127887324532004578362041074269164.html?mod=WSJ_hp_LEFTWhatsNewsCollection

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