Consumer Prices Soar In July

U.S. consumer prices jumped more than expected to a 17-year high in July, reducing the ability of the Federal Reserve to lower interest rates, Bloomberg News reports.  The consumer price index climbed 0.8%, twice as much as anticipated, the Labor Department reported.  The cost of living was up 5.6% in the year ended in July, the biggest surge since January 1991.  So-called core prices, which exclude food and energy, also rose more than projected.

Consumer prices were forecast to rise 0.4%, according to the median forecast of 78 economists in a Bloomberg News survey.  Estimates ranged from gains of 0.1% to 0.7%.  Costs excluding food and energy increased 0.3% for a second month, exceeding the 0.2% median forecast of economists surveyed.

A jump in the cost of imported goods may give American companies leeway to charge more, economists said.  Prices of products made overseas soared 22% in the year ended in July, the most since at least 1982, the Labor Department reported.