U.S. consumer prices are still surging, up 9.1% in June compared to a year ago, the government reported Wednesday, the fastest increase in four decades.
The Bureau of Labor Statistics said prices were up 1.3% in June compared to May. That figure is also considered to be a big jump, following increases in previous months that are squeezing the household budgets of millions of American families, which include food, gasoline and housing.
The largest increase from May to June was the 7.5% increase in the energy index, which contributed nearly half of the overall increase in inflation. The energy index, which includes prices for fuel, oil, gasoline and electricity, is up 41.6% for the year, the largest 12-month increase since April 1980.
The cost of gasoline was up 11.2% in June, partly reflecting the turmoil in world oil prices brought on by Russia’s invasion of Ukraine, now in its fifth month. Prices at service station pumps, however, have been declining since the time frame of the latest inflation report.
“While today’s headline inflation reading is unacceptably high, it is also out-of-date,” U.S. President Joe Biden said in a statement. “Today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices, that have reduced the price at the pump by about 40 cents since mid-June.
Inflation is our most pressing economic challenge,” he said. “It is hitting almost every country in the world. It is little comfort to Americans to know that inflation is also high in Europe, and higher in many countries there than in America. But it is a reminder that all major economies are battling this COVID-related challenge, made worse by [Russian President Vladimir] Putin’s unconscionable aggression” in his Ukraine invasion.
Aside from the cost of gasoline, most American families are most concerned about increasing food costs, up 1% in June over May and 10.4% compared to a year ago, which is the largest annual increase since February 1981. Apartment rents were eight-tenths of a percent higher in June compared to the month before.
Officials at the Federal Reserve and the White House have expressed ongoing concern about the rapid increase in consumer prices. Polls show it is the single biggest economic concern for American voters four months ahead of a nationwide congressional election, even as U.S. employers are still adding hundreds of thousands of new jobs to the economy each month.
Approval ratings for Democratic President Biden’s performance in office have plummeted, to a large degree over inflation concerns, leading to widespread predictions that Republicans will win control of the House of Representatives and possibly the Senate.
Policymakers at the Fed, the country’s central bank, have embarked on stiff hikes of their benchmark interest rate on the theory that action will curb inflation by increasing borrowing rates for consumers on mortgages, car loans and credit purchases.
That in turn could cut consumer demand and cool off the economy. But the Fed is hoping to impose the higher interest rates without sending the U.S. economy, the world’s largest, into a recession.