Washington: US inflation surged to a new peak of 9.1% in June, further squeezing US families and putting pressure on President Joe Biden. Government data released Wednesday show that the consumer price index has risen sharper than expected compared to May due to the sharp rise in gasoline prices. According to the Ministry of Labor, the 9.1% CPI surge from the last 12 months to June was the fastest rise since November 1981.
Energy has contributed half of the monthly increase, with gasoline surged 11.2% last month and a staggering 59.9% over the past year. Overall energy prices recorded the largest annual rise since April 1980. While acknowledging that inflation was “unacceptably high,” Biden argued that it was “obsolete” because it did not reflect a clear decline in energy prices since mid-June. According to AAA, the national average price of pumps has dropped from $ 5.01 a month ago to $ 4.63 per gallon.
Recent price cuts “provided significant breathing room for American families, and other commodities like wheat have fallen sharply since this report,” the president said in a statement. Biden argued that tackling inflation was a top priority, and acknowledged that his administration needed to “progress faster and more so that price increases could be curbed.” The war in Ukraine has pushed up global energy and food prices, with US gas prices on pumps reaching a record of over $ 5 per gallon last month.
However, energy prices have eased in recent weeks, and oil prices could fall below $ 100 a barrel for the first time since April and begin to ease some of the pressure on consumers. The Federal Reserve may continue to aggressively raise interest rates as it seeks to curb price spikes by cooling demand before inflation takes hold. The US central bank raised rates the largest in almost 30 years last month, and economists said a further three-quarter point hike could occur later this month.
Wall Street stocks fell Wednesday after the report was released, raising concerns about a recession. Some analysts are concerned that the report will encourage the Fed to adopt stricter measures to tighten monetary policy. Ian Shepherdson of Pantheon Macroeconomics summarized the data in one word. “pain”. “This report is a very unpleasant reading at the Fed,” he said. “The possibility of a Fed rate hike this month is ruled out at just 50bp.”
Signs of cooling?
Driven by record high gasoline prices, the consumer price index in June rose 1.3% compared to May. However, Shepherdson pointed out that the data showed signs of price declines and predicted that “this would be the last significant rise.” According to the data, excluding volatile food and energy prices from the calculation, the “core” CPI has risen by 5.9% over the past year. This is still a fast pace, but slowing from the May pace.
Food and housing prices, like car prices, rose in June, although they stabilized or slowed from last month, according to the report. Berenberg Capital Markets’ Mickey Levy said the “expansion” of price increases to more categories was a “cause of concern” for the Fed’s efforts, but “price increases may be mitigated in the short term. There is a reason to believe it may be. “
Still, the big jump left Biden open to fierce criticism from opposition Republicans who blamed Democrats for spending. Even West Virginia Democratic Senator Joe Manchin has accused Washington leaders of ignoring inflationary risks. “It’s clear that no one who visits grocery stores or gas stations can add more fuel to the inflation fire, no matter what the willingness to spend in Congress,” Manchin said in a statement. .. – AFP