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Recent data reveals that prices in the US are rising at their quickest rate in more than 40 years due to the continued high cost of fuel and food.
The Labor Department said that the annual rate of inflation, which measures how quickly prices grow, reached 9.1 percent in the year ending in June and up by 1.3 percent from only May. In addition, last month, the average gasoline price in the US exceeded $5 a gallon, setting new highs. As a result, there have been forecasts that the US central bank may raise interest rates again this month.
The numbers show that after rising from 8.6 percent in May, the US inflation rate has been at its highest since November 1981. There was a belief that shifting consumer spending from commodities to services would reduce inflation, but the fierce labor market has resulted in higher earnings, which have fueled further price increases.
Due to Covid’s supply chain interruption and increased food prices brought on by extreme weather, prices have been increasing in the US since late last year. In addition, global commodity prices have increased as a result of the conflict in Ukraine.
Some economists have also charged that President Biden’s Covid expenditure plans have accelerated price growth. To protect people and companies from the pandemic’s economic shock, it spent a total of $5 trillion (£4.1 trillion) on stimulus measures.
The White House began downplaying the figures earlier this week in anticipation of the most recent data, referring to the Consumer Price Index as a measure with a historical perspective. Indeed, these figures emphasize the price rises from the previous month while failing to consider more recent price decreases, particularly in the case of gasoline.
The research does, however, demonstrate how severely American families’ finances have been impacted. People have already started to alter their spending patterns and use their savings to cover rent and food costs.
American hourly wages have lost more of their real wo
rth than at any other point since the 1980s. And that’s what US President Joe Biden’s party is concerned about. The November midterm elections will determine if Democrats maintain their slim congressional majority. Voters’ thoughts and wallets are, however, burdened by the high living expense.
The Biden administration, whose support is waning as inflation surges, made an effort earlier this week to downplay June’s price increases by highlighting how prices for petroleum and other commodities had since plummeted precipitously.
According to Quincy Krosby, chief equities strategist at LPL Financial, the comments were an “indication the anxiety has intensified for the administration.”
Markets anticipate that the US central bank will again increase interest rates to control rising prices at its meeting in two weeks.
It stated last month that it would be raising its benchmark interest rate by three-quarters of a percentage point, to a range of 1.5 percent to 1.75 percent, the largest increase in almost 30 years. It is expected to increase rates by a comparable amount in July.
Despite the worries, the US was “near to peaking or plateauing in inflation,” according to Mr. Krosby.