On Wednesday, the Labor Department declared that inflation had hit a fresh 40-year record in June. as per the Dow Jones estimate, consumer price has increased 9.1% when compared with last year.
This is one of the quickest rises in price since November 1981 and has even crossed the expectations of economists. And as per the reports released by the Government, the rise in price was broad-based like rent, new and used vehicles, car insurance, and medical care. All these have increased in June rather than the previous month.
In June, Inflation Reached 9.1%, The Highest In 40 Years
The core inflation which excludes volatile food and energy prices has increased 5.9% over the last year and has started slowly increasing from May onwards. As per a research note given out by Gargi Chaudhuri, Head of iShares Investment Strategy Americas at BlackRock, it has been explained that price pressures had widened every single major line item virtually within the inflation categories.
He even added that core inflation is still increasing and moreover the drastic difference between headline and core explains how the recent increase in prices has been affected by food and energy price volatility which results in the shortage of supply.
Even though there has been a common rise in major categories, a few categories have dropped their prices. The airfares and hotel costs are some of the few categories which dropped in June.
As of July, there has been a little relief when the price of gas dropped from $5 on average by half of June to $4.66 nationwide earlier this week.
However, the increasing price has created a lack of confidence among the people, and half of the U.S. population is of the opinion that embarking on inflation must be the top priority of the government this year. This was recorded from an AP-NORC poll held in June.
The inflation which is troubling Americans can be considered a most pressing economic concern and this can also be big political trouble for the current Biden government. Because of this, the Federal Reserve has also quickly increased its interest rates in the past two decades which is to cool down the current issues with increasing prices.
According to Robert Frick, corporate economist at Navy Federal Credit Union, the consumer price index has created another shock among people.
And when compared with the percentage till now, June’s is much higher. He continued that this is the same as the broadening sources of Inflation.
Even though the CPI increase is guided by energy and food prices which could be a huge global problem, the prices for domestic goods and services are also increasing. He even says that this issue can even take the Federal Reserve further into an assertive position.