Inflationary pressures continued to grip the United States with gas prices and grocery bills on the rise throughout much of June
The latest consumer price index (CPI) report showed that inflation was at an annualised pace of 9.1% in June, representing the fastest rate in 41 years.
For months consumers have been suffering from rapid inflation which is devaluing wages and making essentials prohibitively expensive for low-income households. The latest report details the rapid rise in gasoline prices, rental payments and grocery bills.
Experts had warned of another bleak CPI report but the figures presented exceed even the Dow Jones’ prediction of an 8.8% increase. In recent weeks the average price of gasoline has fallen, dropping from around $5 in early June to $4.65 this week.
Core inflation remains high
Today’s report will make bleak reading for President Biden, who is under huge pressure to bring down inflation and provide economic relief for millions of Americans. Underscoring the rapid rate of inflation is a slightly lower, but still high, rate of core inflation.
The headline figure of 9.1% includes sectors such as motor fuel and food, both of which can be very volatile and can sometimes create a misleading impression of the economy as a whole. As such core inflation, which excludes the less stable products, is sometimes used instead.
However even by this metric the rate of inflation remains a worry. In June the rate dipped slightly from 0.1 percentage points to 5.9%, but this also exceeded most economists’ expectations for the month. That core inflation is still high suggests that the underlying cause of the price rises goes beyond short-term trends or the economic sanctions placed on Russia, and points instead to a dangerously overheated economy.
White House warned in advance of high inflation figures
Although today’s report did exceed expectations, the White House has known for some time that the CPI figures for June would likely show a considerable increase. Earlier this week White House officials sought to foreshadow the inevitable news.
National Economic Council Director Brian Deese and Cecilia Rouse, chair of Biden’s Council of Economic Advisers, co-authored a memo which claimed to provide “context” for the report.
They wrote that the data “will largely not reflect the substantial declines in gas prices we’ve seen since the middle of June,” adding that “gas prices can be expected to decline in the weeks ahead.”
They also painted inflation as a global phenomenon and made reference to the rate of 8.6% n the Eurozone and price rises of 9.1% in the United Kingdom.