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According to the most recent statistics, the cost of food and gasoline continues to rise at a rate that is faster than it has in more than 40 years.
The Labor Department reported that in the year ending in June, inflation, which measures the rate at which prices grow, jumped by 1.3 percent from only May. In addition, last month, average gasoline prices in the US exceeded $5 per gallon, setting new records. According to projections made in response, the US central bank is expected to raise interest rates again this month.
The numbers show that the US inflation rate has jumped from 8.6 percent in May to now at its highest level since November 1981. There was a belief that a change in consumer spending from products to services would slow inflation, but the fierce competition for labor has increased wages, which has fueled further price increases.
Prices have been increasing in the US since late last year as a result of COVID’s disruption of the supply chain and higher food prices brought on by extreme weather. In addition, commodity prices have increased globally as a result of the conflict in Ukraine.
In addition, some economists attribute the acceleration of price rises to President Biden’s Covid expenditure plans. To protect individuals and companies from the economic shock of the epidemic, $5 trillion (£4.1 trillion) worth of stimulus measures were used.
The White House began downplaying the figures earlier this week in anticipation of the most recent data, referring to the Consumer Price Index as a metric that looks backward. And it’s true that these figures emphasize the price hikes from the prior month while failing to take into account more recent price decreases, particularly in the case of gasoline.
But this survey does highlight how severely American households’ finances have been impacted. Already, many are modifying their spending patterns and using their savings to cover rent and food costs.
Since the 1980s, no epoch has seen a greater decline in the real value of American hourly wages. So naturally, US President Joe Biden and his party are concerned about this. Democrats are frantically trying to hold onto their slim congressional advantage ahead of the midterm elections in November. However, the increasing cost of living affects voters’ thoughts and wallets.
The Biden administration attempted to downplay June’s price increases earlier this week, highlighting how the cost of gasoline and other commodities have subsequently dropped significantly. However, their efforts failed as inflation surged, and their popularity plummeted.
Meanwhile, Quincy Krosby, the chief equities strategist at LPL Financial, claimed that the remarks were “an indicator the anxiety has intensified for the administration.”
At its meeting in a fortnight, the US central bank is anticipated by the financial markets to increase interest rates once more in an effort to control rising prices.
Last month, it stated that its key interest rate would rise by three quarters to a range of 1.5 percent to 1.75 percent, marking the largest rate increase in almost 30 years. According to most predictions, rate increases of this magnitude are expected in July.
Despite the worries, Mr. Krosby claimed there were indications the US was “near to peaking or plateauing in inflation.”