Prices in the US are rising at their fastest pace in over 40 years as gas and food costs remain high, the latest figures show.
Inflation, the rate at which prices are rising, hit 9.1% in the 12 months to June and has risen 1.3% since May alone, the Labor Department said.
US gasoline prices hit record highs last month, averaging over $5 a gallon.
This has led to forecasts that the US Federal Reserve will raise interest rates further later this month.
According to the data, US inflation is now at its highest level since November 1981, after rising from 8.6% in May.
There was hope that a shift in spending from goods to services would help cool inflation, but fierce competition for labor has led to higher wages, fueling further price increases.
Earlier this week, the Biden administration, whose popularity has fallen as inflation has risen, tried to downplay rising prices in June, stressing that the cost of energy and other commodities has fallen sharply since then.
However, Quincy Krosby, chief equity strategist at LPL Financial, said the comments were an “indication that concern for management has deepened”.
“No one was expecting pressure to be over 9%,” he added.
Financial markets are expecting the US Federal Reserve to hike interest rates again at its meeting in two weeks in a bid to curb rising prices.
Last month it announced the biggest rate hike in almost 30 years, raising its benchmark interest rate by three-quarters of a percentage point to a range of 1.5% to 1.75%. It is widely recommended to raise rates by a similar margin in July.
Despite the concerns, Mr Krosby said there were signs the US was “close to peaking or plateauing” in inflation.
“We’re starting to see prices falling in raw materials, freight and shipping, and global supply chain challenges appear to be easing on margin, which should lead to a drop in prices,” he said.
Add Comment