Economic news mixed
September 13, 2005
US economic news was mixed on Tuesday as separate reports had wholesale inflation up in August due to higher prices for gasoline but the trade deficit down in July despite record-high oil imports.
The US Labor Department reported that wholesale prices were up by 0.6 percent in August, less than their 1 percent rise in July. Core inflation, which excludes food and energy costs, remained the same in August.
Wholesale energy costs were up by 3.7 percent in August, but food costs were down for the fifth month in a row and the wholesale price of passenger cars fell by 1.3 percent on the month.
Some analysts are concerned, however, that high oil prices will begin to leak through to other sectors as energy surcharges are being assessed more frequently and the high energy prices begin to be passed on to the consumer. Meanwhile, July’s trade deficit fell by 2.6 percent to $57.9 billion.
However, even the news about the trade deficit is not good with the annual rate so far this year running at $693.1 billion, ahead of last year’s deficit. The US trade deficit with China was up 0.3 percent to an all-time high of $17.7 billion and was running an annual rate 29 percent higher than last year at the same time.
Meanwhile, the US exports of goods and services were up by 1 percent. Analysts believe that the trade deficit will be even steeper next year as oil prices continue to soar and the US imports more oil. Total imports were down by 0.7 percent, but oil imports were up by 21.3 percent in July.