WASHINGTON: Rising gas, food and rent prices surge US inflation A new four-decade peak in June put further pressure on households and potentially sealed the case for another major interest rate hike. federal ReserveWith high borrowing costs to follow.
Consumer prices rose 9.1% from a year ago, the government said on Wednesday, the biggest 12-month increase since 1981, and up from an 8.6% jump in May. On a monthly basis, prices increased by 1.3% from May to June, followed by a 1% increase in prices from April to May, another substantial increase.
The ongoing price rise underscores the brutal effect that inflation has had on many households, especially with the cost of necessities, rising much faster than the average income. Low-income and black and Hispanic Americans have been hit particularly hard, as a disproportionate portion of their income goes toward essentials like housing, transportation, and food.
Some economists have expressed hope that inflation may reach or be close to a short-term peak. For example, gas prices have fallen from $5 per gallon in mid-June to an average of $4.66 nationwide as of Tuesday—still far higher than a year ago, but a drop that’s slowing for July. Could help inflation and possibly Aug.
In addition, shipping costs and commodity prices have started to decline. Wage growth has slowed. And polls show that over the long term, Americans’ expectations for inflation have plummeted — a trend that often points to more moderate price increases over time.
Yet for now, continued rise in inflation has caused a sharp drop in consumer confidence in the economy, slashed President Joe Biden’s approval ratings and posed a major political threat to Democrats in November’s congressional elections. Forty percent of adults in an AP-NORC poll in June said they thought tackling inflation should be a top government priority this year, up from just 14% who said so in December.
Consumer prices rose 9.1% from a year ago, the government said on Wednesday, the biggest 12-month increase since 1981, and up from an 8.6% jump in May. On a monthly basis, prices increased by 1.3% from May to June, followed by a 1% increase in prices from April to May, another substantial increase.
The ongoing price rise underscores the brutal effect that inflation has had on many households, especially with the cost of necessities, rising much faster than the average income. Low-income and black and Hispanic Americans have been hit particularly hard, as a disproportionate portion of their income goes toward essentials like housing, transportation, and food.
Some economists have expressed hope that inflation may reach or be close to a short-term peak. For example, gas prices have fallen from $5 per gallon in mid-June to an average of $4.66 nationwide as of Tuesday—still far higher than a year ago, but a drop that’s slowing for July. Could help inflation and possibly Aug.
In addition, shipping costs and commodity prices have started to decline. Wage growth has slowed. And polls show that over the long term, Americans’ expectations for inflation have plummeted — a trend that often points to more moderate price increases over time.
Yet for now, continued rise in inflation has caused a sharp drop in consumer confidence in the economy, slashed President Joe Biden’s approval ratings and posed a major political threat to Democrats in November’s congressional elections. Forty percent of adults in an AP-NORC poll in June said they thought tackling inflation should be a top government priority this year, up from just 14% who said so in December.