March 22, 2023

Taylor Daily Press

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Inflation in the US has accelerated to more than 9% and "Joe Sixpack" feels it in his wallet |  money

Inflation in the US has accelerated to more than 9% and “Joe Sixpack” feels it in his wallet | money

Inflation in the US rebounded more strongly than expected in June. It accelerated to 9.1 percent. This was reported by the US Department of Labor. Analysts expected 8.8 percent.

Consequently, the inflation rate reached its highest level since November 1981. In May, consumer prices rose by 8.6 percent year on year. Between May and June, the inflation rate was 1.3%. This is the strongest monthly increase since 2005. Here, analysts of the financial news agency “Bloomberg” expected an increase of only 1.1 percent.

Energy and food prices

According to the Ministry of Labor, the rapid rise in prices affects all sectors. The biggest impact is due to housing, fuel and food prices. In one year, for example, energy prices rose 41.6 percent, the strongest increase since April 1980. According to the US Energy Agency, the price of gasoline broke the symbolic $5 per gallon (3.8 liters) mark last month, unprecedented in the United State. Food prices rose 10.4 percent in one year.

The Federal Reserve, the US central bank, is under mounting pressure to intervene significantly. The Fed has been raising interest rates since March. Economists expect a second increase of 75 basis points to come later this month. The chance of a 100 basis point increase is also increasing, Bloomberg said. Fed policymakers had already proposed a 75 basis point hike for July. The downside to cash is the fear that higher interest rates could lead to a recession in the US.

President Joe Biden wants to quell the price boom, but he’s seeing his popularity plummet due to higher prices. © Reuters

Biden: ‘Unacceptably high’

Extremely strong inflation is eroding the purchasing power of the “Joe Sixpack”, which also threatens economic growth. Rapid price increases are also bad news for President Joe Biden. He wants to quell the price boom, but sees his popularity decline due to the price increase. Biden, for example, has already released oil from strategic reserves to lower fuel prices at the pump. He also criticized the major oil companies for not doing enough to cope with the high oil prices.

Meanwhile, Biden has responded to the new inflation numbers. It said in a statement that it is “unacceptably high” but on the other hand it is “outdated” because it does not reflect low gas prices. Today’s data “does not fully reflect the roughly 30-day period in which fuel prices have fallen.” Biden said prices at the pump have fallen about 40 cents since the middle of last month. “These savings provide a great deal of breathing space for American families. In addition, other commodities such as grain have fallen sharply since this (inflation) report.”

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