Wholesale Prices Soar in June; Sales are Sluggish (Martin Crutsinger)

WASHINGTON - The economy showed the depth of its twin problems on Tuesday, slow growth and rising inflation, as the nation wrestled with a teetering financial system, a slumping dollar and rising prices for food and fuel.

The Labor Department reported that soaring costs for gasoline and food pushed inflation at the wholesale level up by a bigger-than-expected 1.8 percent in June, leaving inflation rising over the past year at the fastest pace in more than a quarter-century.

{xtypo_quote_left} For June, energy prices at the wholesale level shot up by 6 percent; the price of unleaded regular gasoline surged by 9 percent following an even bigger 9.6 percent increase in May. The 0.1 percent rise in retail sales was even weaker than the 0.4 percent gain that analysts had been expecting.{/xtypo_quote_left} 

Over the past 12 months, wholesale prices are up 9.2 percent, the largest year-over-year surge since June 1981, another period when soaring energy costs were giving the country inflation pains.

Core inflation, which excludes energy and food, was better behaved in June, rising by just 0.2 percent, slightly lower than expectations.

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