High oil prices mean all costs more

OPINION:

“Treasury Secretary Janet Yellen admits she was wrong on inflation” (Web, June 1) is reminiscent of Ms. Yellen’s October 2005 assertion that “the economy would likely be able to absorb the shock” caused by the deflation of the housing bubble.

Any attempt at balancing the current inflationary spiral requires an understanding of the pervasive effect that high oil prices have on the manufacturing and distribution of almost all consumer and industrial products. As long as petrochemical prices rise, prices of consumer goods will necessarily rise, too, and cause greater inflationary pressure than higher prime rates can counteract.

Under these circumstances, higher prime rates without lower energy costs will result in continued inflation, reduced discretionary spending, tighter consumer credit, a lower GDP, stagflation and eventual recession.

WILLIAM T. FIDURSKI

Clark, New Jersey