Wholesale Prices Surge in January

Inflation at the wholesale level soared in January by the fastest pace in 16 years, pushed higher by costs for food, energy and medicine.

The Labor Department said Tuesday that wholesale prices rose 1% last month, more than double the 0.4% increase that economists had been expecting.

The worse-than-expected performance was certain to capture attention at the Federal Reserve, which has chosen to combat a threatened recession by aggressively
cutting interest rates in the belief that weaker economic growth will keep a lid on prices.

But the combination of rising inflation and weaker growth raises the threat of "stagflation," the economic malady that plagued the country through the 1970s, when a series of oil shocks left households battered by the twin problems of stagnant growth and rising prices.

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This article concerns the rising inflation rates that the United States's economy has been experiencing. This increase is attributed to rising costs for food, energy, and medicine. This article also addresses the Federal Reserve's attempt to avoid a recession by drastically cutting interest rates hoping that the "weaker economic growth will keep a lid on prices." Because of these two decisions, there are concerns that the United States's economy will become stagnant, a fear they called "stagflation." There has also been an increase in wholesale prices which the government is going to attempt to fight with one of the previous mentioned methods. The Federal Reserve's role in fighting the stagnation, inflation, and interest rates shall be evident in the next few months to see the measures they take to change these three problems the United States's economy is experiencing.

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