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

Economic Indicators Jul 13, 2022 08:30AM ET
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© 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.

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

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Comments (70)
Abc Xyz
Abc Xyz Jul 13, 2022 10:15PM ET
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Bidet is a russian sent spy to destroy US
Abc Xyz
Abc Xyz Jul 13, 2022 10:13PM ET
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Good job, bidet
Abc Xyz
Abc Xyz Jul 13, 2022 10:04PM ET
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Time to impeach the focker
Darryl Allen
Darryl Allen Jul 13, 2022 10:02PM ET
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Democrats did this
ZS Beck
ZS Beck Jul 13, 2022 8:46PM ET
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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.
Mark Jannetty
Mark Jannetty Jul 13, 2022 12:00PM ET
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not even the best of you libs, can spin this administration as anything but a disaster. Don't try to say Russia! no one buys that
Brad Albright
Brad Albright Jul 13, 2022 12:00PM ET
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Sure, inflating ******** but its a world problem and about to subside. In the mean time, record employment, healthy corporate profits, an historic appointment to the Supreme Court, a robust return to international leadership on the world stage and a domestic manufacturing resurgence. It's also nice to have a person of decency in the presidency that parents can, once again, point to as a role model.
First Last
First Last Jul 13, 2022 12:00PM ET
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Watch how the market recovers once Russia starts withdrawing from Ukraine.
CS Greer
CSGreer Jul 13, 2022 12:00PM ET
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Nothing historic about the SCOTUS appointment. We already have Clarence Thomas and he's the most awesome one on the SCOTUS.
Brad Albright
Brad Albright Jul 13, 2022 12:00PM ET
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CS Greer We, comrade?
Darryl Allen
Darryl Allen Jul 13, 2022 12:00PM ET
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omg you actually blame Russia for everything since Trump was elected
Francis Lim Wei
Francis Lim Wei Jul 13, 2022 11:34AM ET
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core CPI is 5.9% improved and peaked compared to June 6% it's actually good news we are recovering
Mark Jannetty
Mark Jannetty Jul 13, 2022 11:34AM ET
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what world do you live in? 9.1 is still a joke. food, gas, housing are way more. because wood fell 30%, which is still 100% more than a year ago does not show improvement.
Ricardo Diogo
Rcd72 Jul 13, 2022 11:34AM ET
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ask Elon a lift back from Mars!
Dennis Chuck
Dennis Chuck Jul 13, 2022 11:12AM ET
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Inflation 9.1%, nasdaq rises???
First Last
First Last Jul 13, 2022 11:12AM ET
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Flat
Mark Jannetty
Mark Jannetty Jul 13, 2022 11:12AM ET
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bidens brain scan?
First Last
First Last Jul 13, 2022 11:12AM ET
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Mark Jannetty   Being brain-dead wouldn't stop retrumplicans from blaming everything on Biden.  That means they're stupider than someone brain-dead.
Ricardo Diogo
Rcd72 Jul 13, 2022 11:12AM ET
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FED did a good job at making money worthless...
Mark Jannetty
Mark Jannetty Jul 13, 2022 11:12AM ET
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Biden setting records like no other president in history. Hisler has a better job approval
soho electronics
soho electronics Jul 13, 2022 10:49AM ET
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yes the nasdaq will always turn green. what a joke
Edward Chong
Edward Chong Jul 13, 2022 10:49AM ET
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ya boy. dont even know what sort of trading is this. only the computer understand their own style.
 
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