Inflation reached 9.1% in June, highest in 40 years
According to new statistics issued by the Bureau of Labor Statistics on Wednesday, consumer prices in the United States increased by 9.1 percent year over year in June, marking a new epidemic period peak for inflation.
That is the highest level seen in almost four decades, and it is also up from the previous measurement, which indicated a yearly price increase of 8.6 percent as of May. And it is a lot more than the 8.8 percent that Refinitiv’s panel of economists projected.
The CPI for June also revealed an increase of 1.3% from May to June in the overall prices paid by consumers for a wide range of goods and services.
The price of gasoline, which rose by about 60 percent year-on-year in June, was a major factor in the overall increase. Last month, the average price of a gallon of gas in the United States topped $5, a new record high for the country. Power and gas costs increased by 13.7% and 38.4%, respectively, over the past year as of June. Over the course of a year, energy costs increased by 41.6%.
As a result, the price hikes were felt by consumers in every demographic. Eggs increased 33.1%, butter 21.3%, milk 16.4%, chicken 18.6%, and coffee 15.8% over the previous year, all while overall food prices increased 12.2%. The price of housing rose by 5.6%.
President Joe Biden called the Consumer Price Index for June “unacceptably high” on Wednesday, but he also called it “also out of date,” because gas costs have dropped in the recent month. From their June highs, the price of gasoline and crude oil has dropped below $100 per barrel.
Almost half of the monthly inflation increase was due to energy costs, Biden added. Since mid-June, petrol prices have dropped by around 40 cents per gallon, although today’s data only partially reflects this trend. Those savings are giving American households a much-needed sigh of relief. Moreover, since this study was released, the prices of other commodities, including wheat, have dropped significantly.
Again, Biden stressed that he places “top priority.” on reducing inflation.
Mark Zandi, chief economist of Moody’s Analytics, estimates that the typical American family must now pay $493 more each month to buy the same goods and services as they did at this time last year.
Furthermore, wage growth is not keeping up with the rate of inflation.
The Bureau of Labor Statistics said on Wednesday that real average hourly earnings, which account for pay growth adjusted for inflation, fell 1% from May to June and are down 3.6% from June 2021.
The gains have been “Inflation has pretty much eroded most of the gains,” by inflation, according to Kathy Jones, managing director and chief fixed income analyst at Charles Schwab. People’s ability to spend money is decreasing.
Prices in the core component of the consumer price index (CPI), which excludes volatile categories like food and energy, increased by 0.7% between May and June and 5.9% for the year ending in June.
Because of its importance in predicting future inflationary tendencies, the Federal Reserve is expected to continue its aggressive series of rate hikes to chill the economy and bring down rising prices in light of the most recent statistics. At its upcoming monetary policy meeting on July 26-27, the Federal Reserve is largely expected to raise its benchmark interest rate by at least 75 basis points.
Core inflation appears to have levelled off, and expectations are for it to continue falling in the year-over-year comparison, according to Cailin Birch, global economist at the Economist Intelligence Unit. However, it is too early to say whether inflation has peaked, especially given the broader volatility within the global economy.