A new government report confirms what the average person on the street has been experiencing for some time now. Rising inflation has led to the highest price rises in United States since 1981. This in turn has brought down spending by consumers who are being compelled to restrict their household budget.

A report brought out by the US Commerce Department revealed that in June 2008, inflation inched northward by 0.8 percent which was the highest increase since the 1.0 percent rise recorded in February 1981. Soaring prices of food, gasoline and other necessities brought down inflation-adjusted spending by 0.2 percent in June 2008. This Tuesday the Federal Reserve is scheduled to decide on prevailing interest rates which many experts feel will remain unchanged. However, high inflationary conditions will render all options difficult.

Even as the US economy continues to battle the twin demons of economic slow down and rising inflation, some manufacturing sectors reported increase in orders. A separate economic report states that factory orders in June rose by 1.7 percent which surpassed industry expectations. The rise in orders was mainly driven by heavy demand for military equipment, steel and higher cash value of orders for refined petroleum goods.

-Kalyani Mookherji