Consumer inflation in the United States picked up in June as gasoline and food prices remained high, resulting in the highest annual rate in 40-1/2 years and consolidating expectations that the Federal Reserve will raise interest rates by 0.75 points. percentage at the end of this month.
The consumer price index rose 1.3% last month, after advancing 1.0% in May, the Labor Department said on Wednesday. Economists polled by Reuters had forecast a 1.1% rise in the index.
In the 12 months through June, consumer prices jumped 9.1% from 8.6% in May. This was the biggest advance since November 1981.
Consumer prices are rising amid problems in global supply chains and massive government fiscal stimulus introduced at the start of the Covid-19 pandemic.
The Ukrainian War, which caused a spike in global food and fuel prices, exacerbated the situation.
US gasoline prices hit record levels in June, averaging above $5 a gallon, according to AAA data.
They have since fallen from last month’s peak and averaged $4,631 a gallon on Wednesday, which could ease some of the pressure on consumers.
The inflation data came after a report that showed stronger-than-expected job growth in June. The US economy created 372,000 jobs last month, the government said on Friday (8).
The tightening of the labor market is also highlighted by the fact that there were almost two jobs for every unemployed person at the end of May. The Fed wants to cool demand to bring inflation down to its 2% target.
Financial markets expect the US central bank to raise its interest rate by another 0.75 percentage point at its July 26-27 meeting. Since March, the bank has raised interest rates by 1.50 points.
There was an expectation that a shift in spending from goods to services would help cool inflation. But the very tight labor market is pushing up wages, contributing to higher prices for services.
Underlying inflationary pressures remained strong over the past month. Excluding the volatile food and energy components, the consumer price index rose 0.7% in June, after rising 0.6% in May. The so-called core inflation increased 5.9% in the 12 months through June, after rising 6.0% in May.
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