A couple weeks ago those with good credit scores could have gotten a 30-year mortgage at 5.5 percent. Not anymore. Wholesale inflation blasted off in January at twice the rate economists expected, the Labor Department said this morning. That should bump up long-term borrowing costs, because lenders demand higher rates to compensate for the erosion of capital caused by inflation. From AP:

Inflation at the wholesale level soared in January, pushed higher by rising costs for food, energy and medicine. The monthly increase carried the annual inflation rate to its fastest jump in a quarter century.

The Labor Department said Tuesday that wholesale prices rose 1 percent last month, more than double the 0.4 percent increase that economists had been expecting.

The January surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years, since prices had risen at a 7.5 percent pace in the 12 months ending in October 1981.

After the news was released at 8:30 the yield on the 10-year Treasury note briefly spiked and then calmed down. The 10-year is an OK proxy for the mortgage-rate trend (not the mortgage-rate level). Gold popped $8. With so many inflation signs, I doubt we'll see 30-year fixed mortgage rates under 6 percent for a while.