Which, in this case, is oil:
Inflation at the wholesale level last month soared by the largest amount in more than 15 years, reflecting the surge in energy prices that occurred following the Gulf Coast hurricanes.
The Labor Department reported that wholesale prices jumped 1.9 percent in September, led by surging prices for gasoline, natural gas and home heating oil after the widespread shutdowns of refineries and oil platforms along the Gulf Coast. Food prices, which had been declining, posted the biggest increase in 11 months as the price of eggs shot up by a record amount.
Meanwhile, Fed. Chairman Alan Greenspan tells us we better just learn to deal with it:
US Federal Reserve chairman Alan Greenspan said the world would have to learn to live with high oil prices and their negative impact on economic growth “for some time to come”.
“Although the global economic expansion appears to have been on a reasonably firm path through the summer months, the recent surge in energy prices will undoubtedly be a drag from now on,” Greenspan told business leaders here…
Greenspan also said the impact of high oil prices on economic growth and inflation was likely to be less severe than during the 1970s oil price spikes.
Taking into account inflation, the average price of crude oil was still below the peak of February 1981 in the wake of the Iranian Revolution, when oil hit the equivalent of 75 dollars a barrel in today’s prices.
Oil is only two-thirds as important as an input into world gross domestic product now as it was three decades ago, he noted.
This meant the recent surge in prices “is likely to prove significantly less consequential to economic growth and inflation than the surge in the 1970s.”
More bad news for the administration, particularly the way the economy has been humming the past quarters.