Inflation Rate

Consumer prices soared in January, climbing seven times faster than last year's inflation rate and helping to drive down real wages this year. The 0.7 percent jump in the Consumer Price Index was the biggest monthly increase in nearly five years and was fueled by sharply higher gasoline prices, the Labor Department reported yesterday. The department revised the way it figures the index to give more relative importance to services than in the past, as opposed to goods. At the same time, housing costs are given more weight in the index, while energy expenses and food costs receive less.

Rising energy prices hit Americans for the third straight month in October, pushing inflation up a sharp 0.6 percent, the government reported today. The 0.6 percent rise in the Consumer Price Index followed jumps of 0.8 percent in August and September. That means that in the three months since Iraq invaded Kuwait, inflation has risen at an annual rate of 8.9 percent, the fastest three-month advance since the 1981-82 recession, the Labor Department said. During all of last year, inflation rose 4.6 percent.

Consumer prices nationwide hit the highest level in six years in 1987, jumping to 4.4 percent, but that's still not setting off any economic alarms. The jump was actually lower than economists expected, but they said yesterday that it doesn't signal a return to the double-digit inflation rate of eight years ago. Philadelphia's price index outgrew the national Consumer Price Index, settling in at a rate of 5.6 percent, the highest since the 9.7 percent rate in 1981, due mainly to increased housing, apparel and transportation costs.

Last week's big economic news was hard to ignore: The annual inflation rate hit 4.7 percent, its highest level since 1982. For some, it was deja vu, recalling a time when runaway prices cut deep into people's income and long-term investments. But don't circle those financial wagons just yet, some experts say. The latest inflationary blip should be short-lived, they say, only a brief stop on the recovery trail. It's called cyclical inflation, a condition that exists when prices jump sharply, then fall back to a slower but steady pattern.

A record increase in gasoline prices fueled a large, 0.7 percent jump in consumer inflation in April, the government said today. Last month's climb in the Labor Department's Consumer Price Index followed advances of 0.5 percent in March and 0.4 percent in February. It was the steepest one-month increase since an identical 0.7 percent rise in January 1987. For the first four months of the year, inflation at the retail level ran at a 6.6 percent annual rate, sharply higher than the 4.4 percent annual increases in both 1988 and 1987.

Consumer prices rose just 2.9 percent in 1992, the government reported yesterday. It was the second-lowest inflation rate in 27 years. The cloud around this silver lining was the lackluster economy. With millions out of work and others fearful for their own job security, consumer demand waned last year. This forced companies to keep prices low to attract what business they could. "The inflation genie has been put back into the bottle," said John M. Albertine, head of a Washington economic-forecasting firm.

Imagine a United States where rich people could not tell you their income tax rate and working people were lined up for visas to "dis-immigrate," trying to go back to Italy or Germany or wherever their grandparents or parents came from. Welcome to Argentina! Beautiful Argentina, with purple mountains' majesty above the fruited plains, is America through the looking glass. Like the United States, Argentina was a big young land of rich resources and ambitious immigrants eager to exploit them.

The cost of workers' health benefits for the nation's employers increased this year at more than twice the rate of inflation, a study to be released today found. It was the third straight year in which health-coverage expenses increased at more than double the broader inflation rate. And with even larger premium hikes looming next year, many employers - concerned that the cost of health benefits could reduce profits - are shifting more of the expense to workers, according to the study.

Ever wonder what the fiber-optic future will cost? Try $23 billion, for starters. If the state consumer advocate is right, a new version of a bill pending before the state legislature could, over the next 22 years, automatically give Bell of Pennsylvania a total of $23 billion from annual rate increases on basic phone and other monopoly services. Bell yesterday denounced that projection as "wildly overstated," taking issue with some economic assumptions built into the figure.

Inflation erodes the purchasing power of money over time. Its effects on your life depend on how well your income and investments do keeping up. Take a look at these sites to see how you're doing. Digging the data. InflationData.com is a personal-finance site edited by Tim McMahon. It posts a current inflation rate, based on the government's Consumer Price Index for All Urban Consumers, of 2.65 percent. The site is rich in articles, charts and links on housing, employment, other economic matters that go into the cost of living, and calculators for doing some figuring on your own. www.inflationdata.com Grim calculation.

With the government pumping money into the economy and the Federal Reserve pledging to keep short-term interest rates low until late 2014, inflation could soar. What's an investor to do? Pure savers will lose. Low interest rates mean that your deposits aren't going to earn much of anything for the next three years. You're going to lose money on holding cash - after inflation. JPMorgan's Chris Millard explains that with a 2.0-2.5 percent inflation rate, "that means if you leave your money in cash for the next three years, you lose 2.5 percent of that every year.

A law enacted as part of the budget deal reached late Thursday night makes it much more likely that school boards will have to put tax increases up for voter approval. The legislation goes into effect for the 2012-13 school year, so has no impact on district budgets just passed by school boards. But going forward, the legislation "puts taxing and funding decisions where they belong - in the hands of the voters who are footing the bill," Gov. Corbett said at a bill-signing ceremony Thursday night.

HARRISBURG - With only hours left before the end of the fiscal year, the fate of the state's new $27.15 billion budget - once seemingly secure - appeared to be in a holding pattern Thursday night. A last-minute dispute over a school tax bill threatened to derail what appeared to be the smooth passage of the deal negotiated between Gov. Corbett and the Republican-controlled legislature. The bill would make changes to a 2006 law called Act 1 that requires school districts to get voter approval if they want to raise taxes above a state-set inflation rate, with certain exceptions.

WASHINGTON - Reports Wednesday on inflation and manufacturing appeared to offer contradictory snapshots of the economy and helped prompt another selloff on Wall Street. In a report on consumer prices, the Labor Department said declining costs for energy cooled inflation in May. Overall consumer prices rose 0.2 percent, the smallest increase in six months. May marked the first drop in energy costs in nearly a year. But so-called core consumer prices, which exclude volatile food and energy, rose last month by the most in nearly three years.

ORLANDO, Fla. - When it comes to investing his money, Dave Epstein sees no easy answers out there at the moment. Inflation is eroding any returns he would get from relatively safe bank-savings deposits. But the stock market, while offering potentially higher returns, still makes him jittery with its volatility. For now, Epstein has chosen the riskier of the two roads. "Most of my investments are in stock mutual funds. Certificates of deposit were never even a consideration," said the 81-year-old retired lawyer, who lives in Orlando.

Since 2006, Pennsylvanians have been able to vote on proposed school-tax increases that exceed a state-set education inflation rate. That might surprise those who have watched their taxes go up well beyond that rate year after year but who have never been asked to vote on them. That's because the law also allows tax hikes for certain spending categories without voter approval. Now, with the support of the Corbett administration, Republicans in the state House and Senate have introduced bills that would remove those exceptions and require all proposed tax increases above the education inflation rate to be placed on the ballot.

Hey, President Obama has formally announced his reelection bid! I've added the exclamation mark to help ratchet up the excitement. It has been a long and difficult slog since Inauguration Day, so I'm going to assume that the looming inevitability of another presidential campaign is about as welcome as the prospect of trace radioactive elements in your milk. Still, attention must be paid. If you're not up for pondering Obama's current victory odds, no problem, I'll do it for you. Here are the seven easy-to-read factors: Incumbency.

Dear Harry: I have always invested in stocks, but not always to my advantage. Recently, I've been worried too often about the market, so I decided to stick to U.S. securities for any new money that I invest. I have a few EE bonds, but they offer no inflation protection. I am considering I bonds. I'd like to know about how to buy them, how the interest is calculated, how long they last, how the interest is reported for taxes, etc. Thanks. What Harry says: You can buy I bonds at most banks, or you can buy them directly from the Treasury.

They cut staff, dipped into their savings, and came up with new ways to lower expenses, but even so, almost all school districts in the Philadelphia suburbs are raising their property taxes for the coming school year. More than half of those districts are increasing taxes at a rate above Pennsylvania's budgeting benchmark "education inflation" index, which is a combination of the statewide average weekly wage and the wage-based federal education inflation index. That rate is 2.9 percent for the 2010-11 school year.