Consumer prices took their biggest upward jump in 17 years last month, a surge that highlights the squeeze on America's standard of living and the difficult policy choices facing the Federal Reserve.
Fed officials are walking a fine line – and at the moment they'd rather not be forced to focus on inflation as their top priority. They're also trying to revive a moribund economy and prevent a crisis in the financial industry from growing more severe.
Even as consumer prices surged 1.1 percent in June alone, some other news this week gives the central bank some leeway to balance those competing goals. Oil prices, which have been the big driver of inflation around the world this year, fell dramatically.
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"It's a major concern," says Michael Cosgrove, who publishes the EconoClast, a market newsletter in Dallas. "What they're hoping is that the commodity prices start to drift lower later this year. If that happens, then that will go a long way toward resolving the inflation issue." US workers and consumers have been squeezed this year by a combination of fast-rising prices and an economy that's barely growing – with the number of jobs actually falling each month.
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