Life is A Road With Lots of Signs...

...so when you're riding through the ruts, don't you complicate your mind.

- Bob Marley
Wake Up and Live

Good advice, but turns out Bob was a better man than I. The ruts have got my mind so complicated my head hurts. Yesterday, we found out that US producer prices (wholesale costs) had risen year over year by the largest amount in 27 years:

The U.S. producer price index increased 1.8% last month, after seasonal adjustments, with energy prices spurting 6% and food prices growing 1.5%, the Labor Department reported.

Over the past 12 months, the producer price index, which tracks inflation at the wholesale level, gained 9.2% -- the largest year-over-year gain since June 1981.

And, simple economics, on to whom does that increase get passed?

If you picked "the consumer" (and God, but do I hate to hear Americans described that way), you're the winner of a tiny gold star!

Today, we get word that consumer prices have also climbed, by the most in 26 17 years (Bloomberg has corrected the story):

Prices paid by U.S. consumers jumped in June by the most since 1982 on spiraling costs for fuel and food, intensifying the pressure on households struggling with falling home prices and the credit crunch.

Prices paid by U.S. consumers jumped in June by the most since 2005 on spiraling costs for fuel and food, intensifying the pressure on households struggling with falling home prices and the credit crunch.

The cost of living soared 1.1 percent, more than forecast, after a 0.6 percent gain the prior month, the Labor Department said today in Washington. Excluding food and energy, so-called core prices climbed 0.3 percent, also more than anticipated.

The figures underscore why Federal Reserve Chairman Ben S. Bernanke yesterday said inflation risks had ``intensified.'' The surge in energy costs has also trimmed consumer and business spending, hurting growth and making it less likely policy makers will boost interest rates to stem even bigger price increases.

``Inflation has galloped,'' Michael Feroli, an economist at JPMorgan Chase & Co. in New York, said before the report. ``It puts the Fed in a really tricky position. I don't see how they can change rates this year.'' [...]

[...]Americans trimmed purchases of automobiles, furniture and restaurant meals last month as the cost of gasoline soared, a Commerce Department report showed yesterday. Retail sales rose 0.1 percent, less than forecast, a sign the boost from the tax rebate checks is already fading....

...Kimberly-Clark Corp., the maker of Huggies diapers and Scott paper towels, said earnings for this year will trail its previous forecast as expenses rise more than twice as fast as predicted, In May, the company said it would raise prices for a second time this year to counter higher costs for materials such as oil, natural gas and pulp.

UPDATE: Bloomberg has changed this story since it first appeared, softening the language. Yes, consumer prices have jumped by their highest amount since Katrina in 2005, but year-over-year, we're still looking at the largest jump in 17 years:

Prices increased 5 percent in the 12 months to June, the most since May 1991. They were forecast to climb 4.5 percent from a year earlier, according to the survey median.

Not that we needed them to tell us that. Anyone who's gone to the grocery store lately can attest to the fact that stuff just costs a whole lot more these days. Diapers. Paper towels. Food. Have you seen the price of milk? Check your electric bill, add up your monthly gas expenditures, God help you if you've got an ARM fixing to reset.

And then, retreat into your safe place, dim the lights, turn on the Bob Marley and see if you can gain some of that man's chill by sonic osmosis.