Energy Prices Lead Inflation, Overcoming Salary Increases - New York Times

Higher energy prices took a sizable bite out of consumers' wallets in August as inflation rose and negated the value of wage increases, the government reported yesterday.

The Consumer Price Index increased 0.5 percent last month over July, mostly because of higher gasoline and energy costs, the Labor Department said. The so-called core rate of the index, which excludes energy and food, rose only 0.1 percent, less than the 0.2 percent economists had expected.

Compared with August 2004, prices rose 3.6 percent over all and 2.1 percent excluding food and energy.

In the New York area, the Consumer Price Index rose 0.8 percent for the month compared with July, with energy prices up 3.2 percent and apparel prices up 7.2 percent as designers introduced new fall lines.

Nationally, inflation effectively lowered the average weekly earnings by 0.5 percent in August for about four-fifths of American workers who are in manufacturing or nonsupervisory jobs, according to a separate Labor Department report.

Energy prices as a whole rose 5 percent, with gasoline prices jumping 8.3 percent in August, a number that will be even higher this month because of the price spikes after Hurricane Katrina.

Does anyone really understand this stuff? Basically if energy prices grow much faster nobody's income will keep pace. But I think it would be nice if these numbers were real. I'm sure it is the same deal as statistics. What you measure, and how, impacts your results...

Economics