Prices Jump: Led By Energy

What is the cause? Obama and the lefts energy policy which is designed to reduce output while increasing costs, or is it Obama's fiscal madness driving up prices?

A surge in energy prices drove up retail sales and prices paid at the producer level in June, the government reported on Tuesday.

The Commerce Department said that retail sales rose by 0.6 percent as auto and gas sales exceeded expectations. The June figure was the biggest climb in five months. Economists had forecast only a 0.4 percent increase.

While car dealerships enjoyed their best month since January and oil prices drove up receipts at gas stations, sales in other sectors dropped by 0.2 percent. Consumers still appeared reluctant to spend at restaurants and department stores in a sign that a consumer-led recovery remains at a nascent stage at best.

Separately, the Labor Department reported a 1.8 percent increase in the Producer Price Index, a measure of prices paid by retailers to factories and farmers, more than double economists’ forecasts. The index rose 0.2 percent in May.

The jump in the price index is likely to bring back debate of which direction inflation is headed. Weak unemployment and wage data have largely constrained retailers’ pricing power, but surges in energy prices beyond the control of retailers have proved significant.

But most economists say fears of a resurgence of inflation are premature. The June figure was swayed unusually by energy prices.

Part of this was the modest rally in oil prices, and I would imagine summer driving may have led to some increase in gas prices. I suppose pointing out and increase in oil production might create domestic jobs and alleviate some of the cost issues, but according to the president that is an old battle. Wait till cap and tax to really send prices through the roof. By the way check out Palin's superb piece on the issue, its worth the read.