Twin reports from the Labor and Commerce departments Tuesday show soaring wholesale costs, sluggish housing starts and rapidly rising consumer inflation. Wholesale prices are rising at their fastest rate in 27 years and consumer inflation is at its highest point since 1991.
So what's ahead? Analysts predict some good news for autumn and beyond: lower gas prices, airfare deals and a slowing in increasing grocery prices.
That's welcomed by consumers such as Melvin Vincent of Natomas, who just hopes to find the ceiling on mounting prescription prices.
Vincent is a retired custodian who pays about $300 a month for his medications and is still recovering from a stroke. "(Prices are) going to drop because it can't keep going up. I can't buy my medicines," he said. "It's going to have to level off."
Here is a forecast for what is ahead in six categories, experts in these fields told The Bee:
DRUGS
NOW: Big price gains for pharmaceuticals contributed to 0.7 percent rise in core inflation in July, the biggest increase since November 2006.
FORECAST: Rates for brand-name prescription drugs are expected to continue to outpace the rate of inflation, but increasing competition will continue to drive down the price of generic medicines.
GASOLINE
NOW: Self-serve regular gas statewide on Tuesday was $4.03 a gallon, down from $4.45 a month ago.
FORECAST: Gas prices will likely bump up for the Labor Day holiday weekend but fall after that to as low as $3.50 by mid-October.
NATURAL GAS
NOW: Prices have been on the rise, due in part to demand. In New York Mercantile Exchange trading on Tuesday, natural gas futures added 14.6 cents to close at $8.034 per 1,000 cubic feet.
FORECAST: Pacific Gas and Electric Co. has asked the California Public Utilities Commission to approve a 4.5 percent rate increase for October.
GROCERIES
NOW: Grocery prices are expected to increase 5 percent to 6 percent in 2008. That compares with an annual average increase of 2.5 percent from 1990 to 2007.
FORECAST: The U.S. Department of Agriculture projects food prices to increase a bit less rapidly next year at 4 percent to 5 percent.
AUTOS
NOW: Dealers are holding firm on prices of fuel-sipping vehicles, contributing to wholesale inflation but cash-back incentives of $10,000 on big vehicles are common.
FORECAST: If sales do not improve, stocks of dealer inventory are likely to go up. It should be a buyer's market, with consumers saving more money than they do now.
TRANSPORTATION
NOW: Greyhound fares went up 3 percent in the spring, Amtrak boosted Capitol Corridor ticket prices by as much as 11 percent last week, and airlines have raised fares all summer to cover jet fuel costs.
FORECAST: The Air Transport Association of America expects a 5.7 percent decline in traffic for Labor Day weekend. Deals are being offered as carriers such as Southwest and United seek to boost passenger traffic.
Sources: Air Transport Association of America; USDA; AAA, CNW Research; Forrester Research; AARP California; Associated Press; Edmunds.com; PG&E
Contributors: JIM DOWNING, MARK GLOVER, ANDREW MCINTOSH; JIM WASSERMAN
