Business & Economy

US annual inflation rate climbs to 9.1 pct. in June, highest since 1981

Washington, Jul 13 (EFE).- The United States’ inflation rate rose to 9.1 percent in June compared to the same month of last year – a level not seen since 1981 – due mainly to sharp rises in gasoline and food prices, the Bureau of Labor Statistics reported Wednesday.

US consumer prices rose 1.3 percent relative to May, according to that unit of the US Department of Labor.

Those figures confirm that the actions taken thus far by the US Federal Reserve, which has been raising its benchmark interest rate since March and has signaled that more rate hikes are to come to rein in inflation, have not yet had the desired effect.

Food costs and the price of energy – particularly gasoline – were once again the main contributors to this latest inflation hike.

The energy index rose 7.5 percent from May and contributed nearly half of the monthly all-items increase, while the gasoline index rose 11.2 percent and the food index climbed 1 percent.

Energy prices have climbed 41.6 percent over the past 12 months, the sharpest rise since April 1980, and food prices have risen 10.4 percent over that same one-year span, the biggest increase since February 1981.

Core inflation, which excludes volatile food and energy prices, rose an at annual rate of 5.9 percent.

The Federal Open Market Committee, the Fed’s monetary policy-making body, has voted to raise the federal-funds rate at its last three meetings.

The central bank has taken steadily more aggressive action, raising that benchmark rate by 0.25 percentage points in March, 0.5 percentage points in May and 0.75 percentage points in June.

The Fed also has said it intends to raise interest rates once again after this month’s FOMC meeting, scheduled for July 26-27.

The Fed is now clearly focused on bringing down prices and has made it clear on several occasions that it will continue to take decisive action, even if restrictive monetary policy has an adverse effect on growth.

High inflation, and the rise in gasoline prices in particular, is a major concern for US citizens and one of the reasons for President Joe Biden’s current low approval ratings.

The White House on Tuesday sought to get ahead of the new inflation report, with one official telling reporters that the June numbers would not reflect the recent steady decline in gasoline prices.

The average price of a gallon (3.7 liters) of gasoline stood at $4.92 in June but currently sells for $4.66, that official said, adding that futures markets indicate a further decline to as low as $3.30 per gallon.

In the meeting with reporters, another Biden administration official addressed the recession fears.

She acknowledged that the technical definition of a recession is two consecutive quarters of negative economic growth but said other indicators point to the robustness of the US economy.

That official mentioned a strong labor market and high household savings rate as factors that indicate the US is better prepared than other countries to weather the global challenges on the horizon in the next few months.

On Tuesday, the International Monetary Fund lowered its economic forecast for the US, projecting that its gross domestic product will grow 2.3 percent this year and 1 percent in 2023.

Fifteen days earlier, that multilateral institution had forecast that the world’s largest economy would grow by 2.9 percent in 2022 and 1.7 percent next year. EFE


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