Inflation at 5.6% Thanks to 30% Increase in Energy Costs

Today the Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) for July 2008 was 5.6% higher than July 2007. Inflation is being driven by whopping 30% increase in energy prices, and a 13% increase in transportation costs. (Source: BLS Consumer Price Index: July 2008)

The core CPI, which excludes food and energy, was 2.5%. This is the inflation rate that is watched by the FOMC when it decides at its monthly meetings whether to raise the Fed Funds Rate. Since April 2006, core inflation has remained within the 2.2 - 2.5% range, slightly higher than the unofficial targeted inflation rate of 2%. Even though the core inflation is moderate, the Fed is still concerned about the impact of skyrocketing food and energy prices. Normally the Fed would raise interest rates to slow inflation, but with the current economic slowdown, it can't. Read more about the Fed's actions in Banking Liquidity Crisis.

What It Means to You

You need to protect yourself from stagnant economic growth AND inflation in food and energy costs. This means improving your job skills and marketability, consulting with a financial planner, cutting costs and paying off debt. A handy tool is the BLS inflation calculator, which translates inflation into concrete terms. It really hits home when you realize that you need a 5.6% raise just to stay even. Anyone working in corporate America knows that a raise above 3-4% is highly unlikely. So, your best bet is to improve your job skills so you can find a higher paying job. Here are some articles to help you do just that.

Articles from Alison Doyle, About.com Guide to Job Searching

• Prepare for a Job Search
• How to Be a Compelling Candidate
• Switching Gears: How to Tune Up Your Career

More Articles About Beating Inflation

• How Does Inflation Impact My Life?
• What Is Being Done to Control Inflation?
• How Can I Protect Myself From Inflation?