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U.S. Inflation Hits New 4-Decade High of 9.1% in June

Published 07/13/2022, 08:29 AM
Updated 07/13/2022, 08:30 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com --  Consumer inflation in the U.S. leaped to a new four-decade high of 9.1% in June, exceeding analysts' forecasts and piling further pressure on the Federal Reserve to bring it down with faster interest rate rises.

The Bureau of Labor Statistics said prices rose 1.3% on the month alone, which was itself the biggest monthly gain since 2005. That was due largely to big increases in prices for food, gasoline, and shelter.

Stripping out the more volatile areas of the consumer price index, core prices rose 0.7% from May, their biggest increase in a year. The BLS said the rise was "broad-based," even though food, gasoline, and housing accounted for half of the monthly increase.

"Surprisingly there was a lot more goods inflation than anyone (including me) would have expected a few months ago," said Jason Furman, a senior fellow with the Peterson Institute in Washington, DC, said via Twitter. He noted that core goods inflation was higher than core services inflation for the second straight month. Eye-catchingly, prices for used cars and trucks, which had fallen all through the spring, rose by 1.6%, after a 1.8% increase in May.

The only bright spot in the report was that the annual rate for core CPI inflation edged down to 5.9% from 6.0%, although even this fell less than expected.

There's "no sugar-coating this report," said Julia Coronado, a former Fed economist and founder of the consultancy MacroPolicy Perspectives, via Twitter.

While the exceptionally strong annual inflation rate is largely affected by base effects from developments 12 months ago, the monthly rate is still strongly suggestive of broad, ongoing price pressures in the economy.

U.S. stock futures slumped and bond yields rose on the news, which pointed to a worse and more persistent problem with inflation than previously assumed. It's the latest in a succession of negative surprises from the consumer price index, which Wall Street economists have repeatedly underestimated in the last year.

By 8:50 AM ET (1250 GMT), S&P 500 futures had fallen 76 points from immediately before the release to be down 1.5% from Tuesday's close. Benchmark 10-Year Treasury bond yields surged by eight basis points to trade back above 3% at 3.04%. The 2-Year note yield, more sensitive to expectations of Federal Reserve actions, rose 12 basis points to 3.17%, its highest in three weeks.

The news also hit other asset classes, pushing the euro below parity with the dollar for the first time in 20 years. The broader Dollar Index, which tracks the greenback against a basket of advanced economy currencies, rose 0.3% to 108.41, testing the 20-year high that it hit on Tuesday.

Latest comments

Bidet is a russian sent spy to destroy US
Good job, bidet
Time to impeach the focker
Democrats did this
Job well done by the FED and The countless if the stimulus done by the democrats. I think they want to break the world record of inflation. Someone should tell them, that there is no medal for it.
core CPI is 5.9% improved and peaked compared to June 6% it's actually good news we are recovering
ask Elon a lift back from Mars!
yes the nasdaq will always turn green. what a joke
core CPI has fallen mom and yoy. thats an indication that interest rate hikes may not be aggressive % wise though pace may be aggressive. and its an indication that earlier hikes have led to this fall in core CPI from previous month to this month as well as YOY. thats a good sign for inflation getting tamed and possibly CPI too will be tamed in coming months
I think your analysis is sound.
Biden président = 0
- 0.67
double trouble = america
Commodities time
and we can see them that everything that they're trying to do is it lined with the great reset the green New Deal and they're breaking down the system as we know not remember their system is an illusion is a central bank illusionary system that we have been in for a very very long time all they're doing right now is having a controlled demolition to bring us into their new system
take a breath
Primo ultimo Quiet, it's just a copy and paste;)
massive red avalanche coming to bury libirals
As predicted before the US Ponzi Scheme opened for, uh, "trade," savvy "investors" come out of the woodwork to "buy."  Wonder how many thousands of points in losses have miraculously vanished from the system this year?  Guarantee it's a record.  The JOKE of "market" will "rally" and walk a 600 point tightrope on nothing, but can't fall 200 points without flagrant intervention.  The US working class continues to be defrauded in broad daylight.
Wait so printing trillions of dollars lesds to inflation?! Shocking discovery!
CCP shutdowns + Russian aggression leads to inflation.
Everyday, making Jimmy Carter look like one of the better Presidents we have had...
Do you miss the orange man yet????
Orange man praised Putin, whose aggression is most responsible.
 orange man appointed Powell - QE to infinity is Powell's doing - causing vast inflation - Orange man harranged Powell to reduce interest rates, causing more liquidity and debt - Biden then continued the whole process - so they are both utterly to blame - as is the FED - giant ponzi scheme!!!
Bernie Madoff??
there's always a reason for this.
there's always a reason for this.
there's always a reason for this.
50% Next year
what a manipulation...look at gold. every,every opening at ny comex mean one step down 1 to 2 %...Do you really think it is not obvious and what is the SEC doing ? nothing because manipulation of gold is made by central bank and even if central bank (fed)is private, they are above the law. till people get enough of these guys who has a mandate and you have 2 percent max on saving and 14 % inflation(12 x 1.3%)...hello, SEC, hello citisen. we are fooled by incompetent captain but competent thief.!
Inflation is out of control. Oil +commodities are the best assets in this moment.
yes but gold is manipulated full speed...every time comex NY open, a plunge of 1 or 2 % like steps....down..flat...down..flat.....down flat. SEC ? same bed as fed but the value of money is just collapsing and gold as well ??? give me a break. guillotine
don't buy commodities right before the recession hits.....just saying
Strongest economy in the world, the world the world the world, repeat the line.
The market downturn will now begin
you're late
about 7 months late there
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