Tuesday, 16 August, 2022

US consumer prices surge 9.1pc, a new 40-year high

US consumer prices surge 9.1pc, a new 40-year high

WASHINGTON: US inflation surged to a fresh peak of 9.1 percent in June, further squeezing American families and heaping pressure on President Joe Biden, whose approval ratings have taken a battering from the relentless rise in prices.

Government data released Wednesday showed a sharp, faster-than-expected increase in the consumer price index compared to May driven by significant increases in gasoline prices.

The 9.1 percent CPI spike over the past 12 months to June was the fastest increase since November 1981, the Labor Department reported.

Energy contributed half of the monthly increase, as gasoline jumped 11.2 percent last month and a staggering 59.9 percent over the past year. Overall energy prices posted their biggest annual increase since April 1980, reports AFP.

While acknowledging the inflation rate was "unacceptably high," Biden argued that it was "out of date" as it did not reflect a clear drop in energy prices since mid-June.

According to AAA, the national average price at the pump was down to $4.63 a gallon, from $5.01 a month ago.

The recent price drop had provided "important breathing room for American families. And, other commodities like wheat have fallen sharply since this report," the president said in a statement.

Insisting that tackling inflation was the top priority, Biden admitted his administration needed "to make more progress, more quickly, in getting price increases under control."

The war in Ukraine has pushed global energy and food prices higher, and US gas prices at the pump last month hit a record of more than $5 a gallon.

However, energy prices have eased in recent weeks, with oil prices falling below $100 a barrel for the first time since April, which could start to relieve some of the pressure on consumers.

The Federal Reserve is likely to continue its aggressive interest rate increases as it tries to tamp down the price surge by cooling demand before inflation becomes entrenched.

The US central bank last month implemented the biggest rate hike in nearly 30 years, and economists say another three-quarter-point increase is likely later this month.

Wall Street stocks declined Wednesday after the release of the report, which added to recession fears, and some analysts worry the report will prompt the Fed to adopt even tougher measures to tighten monetary policy, such as a full percentage point interest rate increase.