U.S. July PPI 27-year record high of Fed policy challenges.

<P> U.S. Labor Department announced Tuesday, the U.S. July producer price index (PPI) rose unexpectedly, and the highest in 27 years hit a year earlier, mainly because of soaring wholesale energy prices led wholesale prices of multiple products .rise. .Previously announced in July consumer price index (CPI) increased a record 17 year high. .PPI, CPI indicators of the overall classification will challenge the Fed is now higher interest rate policy. .Analysts said the higher prices the next few months unless the trend reversed, or the Federal Reserve may raise interest rates later this year will be re-included in the agenda. .</ P> <P> According to the U.S. Labor Department data showed a seasonally adjusted basis, PPI manufactured goods in July increased by 1.2%; the index rose by 9.8% since June 1981 for the maximum annual .increases. .July, which excludes food and energy prices, core PPI up 0.7%; increase of 3.5% over the same period, reaching 17 year high. .Dow Jones Newswires survey of economists expect the overall PPI increase in July was only 0.5%, core PPI rose 0.2%. .</ P> <P> due this month, energy and commodity prices fell back, and a stronger dollar, it may be expected to ease price pressures. .But with the latest PPI data, Fed officials may be difficult to remain indifferent to the previously announced July consumer price index (CPI) increased a record 17 year high. .PPI and CPI level <P> unless the short term to lower energy prices and rapidly with the drop in Wall Street or the Fed may have to adjust their in 2009 before the same official interest rates remain low expectations. .U.S. July PPI, import prices and CPI data are not optimistic about the three major; U.S. July CPI rose by 5.6%, well above the 1.5% set by the Fed to 2% long-term goal. .<P> Meanwhile, in the case of weak consumer demand, PPI rise also poses a challenge to enterprises. .If you do not raise retail prices, the company must increase productivity, layoffs or lower wages to maintain profits, or costs will lead to decline in corporate profits. .Up to now, some U.S. companies have successfully pressure of rising raw material costs onto the consumer, some enterprises have not yet been successfully transferred. .<P> While Fed officials said in a statement two weeks ago in the policy, inflation remains a serious problem, but in July the price data may not constitute the Fed's policy towards greater impact. .Market participants generally expect the Fed will by next year the inter-bank loans for the federal funds rate target unchanged at 2% since mid-July led to higher prices in recent months, the multiple forces (especially the energy and commodity .higher prices and a weaker dollar) has been reversed </ P>.