NYT: Unexpected Surge in Consumer Prices Fans Inflation Fear [View All]

[DeepModem Mom]

Unexpected Surge in Consumer Prices Fans Inflation Fear
By EDMUND L. ANDREWS

Published: April 15, 2004


WASHINGTON, April 14 — Consumer prices jumped much more sharply than expected in March, driven by increases for gasoline and clothing. The data reawakened worries about a return to higher inflation and higher interest rates.

The Labor Department reported on Wednesday that consumer prices rose by 0.5 percent in March, which would translate to an annual inflation rate of more than 6 percent if it were sustained. The inflation rate for all of 2003 was only 1.9 percent.

More startling to many economists, the "core" rate of inflation that excludes the volatile categories of energy and food rose at the fastest rate in almost four years....

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While it is too soon to tell whether the national March inflation pace will continue, the latest data immediately stoked fears in the financial markets that the Federal Reserve would raise short-term interest rates as early as this summer. Nervous selling by bond investors Wednesday sent the yield on the 10-year Treasury note, which is used to set mortgage and corporate borrowing rates, to 4.37 percent, its highest level since November....


http://www.nytimes.com/2004/04/15/business/15ECON.html