NEWS AT A GLANCE
Soaring Asian inflation spreads overseas
Inflation rates are rising in the U.S. and Europe, but nowhere near as fast as in Asia, where countries like India and Vietnam are already grappling with double-digit inflation. But rising prices in Asia are already starting to affect U.S. inflation, as once-cheap imports are becoming more expensive. “The epicenter of the inflationary storm is really in Asia,” said Cyd Tuano-Amador at the Philippines Central Bank. (The New York Times) The rising inflation rate could cancel out the average 3.5 percent raise that U.S. workers can expect this year, according to a survey by Watson Wyatt Worldwide Inc. The Labor Department pegged annual U.S. inflation at 5 percent in June. (The Wall Street Journal, paid subscription)
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Behind the scenes at the inflation monitor
Federal Reserve economists know quite a bit about what drives inflation figures higher, but they don’t know much about how those figures affect the behavior of consumers and businesses. And a lot rides on what consumers do: If they cut expenses to make up for rising food and fuel costs, inflation might not get out of hand; if they decide that higher prices mean they need higher wages, watch out. So a team of six Fed economists is looking for clues about consumer behavior in advertisements, industry surveys, and phone calls to retailers. The timing of a sale on summer dresses, say, can speak volumes. “You use a fair amount of finesse, judgment, anecdotes, and indicators,” said economist Michael Feroli, a former Fed forecaster. (Bloomberg)
