Reply #3: Rising Prices Prompt Inflation Worries [View All]

WASHINGTON - After years of relative calm on the inflation front, Americans are being battered by $2-a-gallon gasoline, rising food prices and higher medical bills. And there are fears that price pressures could worsen in 2005.



The problem came into sharp focus last week when the government reported that wholesale prices increased in October by the largest amount in more than 14 years, and prices at the retail level recorded the biggest gain since May.


At the same time, energy prices experienced another jump, climbing at an annual rate of 22.5 percent through October. This has contributed to inflation's rising at a 3.9 percent annual rate this year, compared with 1.9 percent in 2003.


Inflationary pressures have led some economists to worry about a possible nightmare scenario: The dollar weakens dramatically, which drives up import prices; as terrorists attack overseas oil production facilities, which drives up energy prices; and like that, America's productivity miracle, a main reason for moderate inflation in recent years, disappears.

more: http://story.news.yahoo.com/news?tmpl=story&cid=509&ncid=718&e=1&u=/ap/20041120/ap_on_bi_ge/inflation_threats