Reply #3: Prices Make Biggest Jump in 25 Years [View All]

[ozymandius]

WASHINGTON - Consumer prices soared last month by the biggest amount in a quarter-century, propelled by Hurricanes Katrina and Rita and the record gasoline costs in their wake. The storms caused industrial production and consumer confidence to plunge, raising new worries about the economy's ability to bounce back.

The Labor Department reported Friday that inflation jumped 1.2 percent last month. Ninety percent of the increase came from a record-shattering 12 percent surge in energy prices, reflecting tight supplies after widespread shutdowns of refineries and oil and natural gas production along the Gulf Coast.

Those shutdowns contributed to 1.3 percent drop in industrial production in September, the biggest falloff in 23 years.

On the consumer front, retail sales managed to eke out just a 0.2 percent gain in September which would have been a 0.2 percent decline if it had not been for a jump in gasoline sales that reflected the soaring prices that went above $3 per gallon. Much of the weakness reflected a big drop in auto sales after two big months of incentive-induced sales.

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