US inflation rate hits 9.1% in June 2022, highest rise since November 1981
WASHINGTON, USA – Consumer prices in the United States jumped 9.1% in June, the largest annual increase in more than four decades amid stubbornly high costs for gasoline, food and rent, which argues in favor of another 75 basis point interest rate hike by the federal government. Book this month.
The larger-than-expected increase in the year-over-year consumer price index reported by the Labor Department on Wednesday July 13 also reflects higher prices for health care, motor vehicles, clothes and household furniture. The CPI has risen the most in almost 17 years on a monthly basis.
Inflation data tracked stronger-than-expected job growth in June and suggested the Fed’s aggressive monetary policy stance has made little progress so far to cool domestic demand and bring back the economy. inflation to its target of 2%.
Although a global problem, high inflation is a political risk for US President Joe Biden and his Democratic Party ahead of congressional elections in November.
“Despite the Fed’s best intentions, the economy appears to be heading for a higher inflation regime,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The Fed is even further behind the curve after today’s sizzling report.”
The consumer price index rose 1.3% last month, the biggest monthly increase since September 2005, after rising 1% in May. A 7.5% rise in energy prices accounted for almost half of the increase in the CPI. Gasoline prices jumped 11.2% after rebounding 4.1% in May.
Natural gas prices rose 8.2%, the highest since October 2005, while the cost of electricity rose 1.7%. Food prices increased by 1%. The cost of food eaten at home rose 1%, posting the sixth consecutive monthly increase of at least 1%.
In the 12 months to June, the CPI jumped 9.1%. This is the largest increase since November 1981 and follows an 8.6% increase in May. Economists polled by Reuters had forecast the CPI to rise 1.1% and accelerate 8.8% year-on-year. Consumer prices are rising, driven by tangled global supply chains and massive fiscal stimulus from governments at the start of the COVID-19 pandemic.
The ongoing war in Ukraine, which has caused a spike in global food and fuel prices, has aggravated the situation.
The Bank of Canada on Wednesday announced a one-percentage-point hike in its key rate, an oversized hike last seen in 1998.
Gasoline prices in the United States hit record highs in June, averaging topping $5 a gallon, according to data from motorist advocacy group American Automobile Association. They have since declined from last month’s high and averaged $4.631 a gallon on Wednesday, which may ease some of the pressure on consumers.
US stocks opened lower. The dollar appreciated against a basket of currencies. US Treasury prices fell.
The government announced last Friday, July 8, that the economy added 372,000 jobs in June, with a broader measure of unemployment falling to a record low.
The tight labor market is also underscored by the fact that there were nearly two jobs for every unemployed person at the end of May. Financial markets are massively expecting the US central bank to raise its key rate by 75 basis points at its July 26-27 meeting. The Fed has raised its overnight interest rate by 150 basis points since March.
Annual food prices are rising at their fastest pace since February 1981, with energy prices posting their steepest rise in more than 42 years.
There had been hope that a shift in spending from goods to services would help calm inflation. But the very tight labor market is driving up wages, contributing to higher prices for services.
Underlying inflationary pressures remained strong last month. Excluding the volatile food and energy components, the CPI rose 0.7% in June after rising 0.6% in May. The so-called core CPI was boosted by the cost of rent, which jumped 0.8%, the biggest monthly increase since April 1986.
Prices for new vehicles continued their upward trend, as did those for used cars and trucks. The cost of motor vehicle maintenance and repairs jumped 2%, the highest since September 1974. Health care costs rose 0.7%, with a record increase in the cost of dental services. Clothing prices rose 0.8%, although retailers said they are expected to offer discounts due to excess inventory.
Core CPI rose 5.9% in the 12 months to June. This followed a 6% rise in the 12 months to May. High inflation and rising borrowing costs are fueling fears of a recession early next year. – Rappler.com