Consumer prices are rising, fueled by complicated global supply chains and massive fiscal stimulus from governments early in the COVID-19 pandemic. The war in Ukraine, which has caused world food and fuel prices to rise, has made the situation worse.
Gasoline prices in the United States hit record highs in June, averaging more than $5 a gallon, according to data from the motoring advocacy group AAA.
The inflation data followed stronger-than-expected job growth in June. The economy added 372,000 jobs last month, the government reported last Friday, with a broader measure of unemployment falling to a record low.
The tightness of the labor market is also underlined by the fact that there were almost two jobs for every unemployed person at the end of May. The Fed wants to cool demand in the economy to bring inflation down to its 2% target.
Underlying inflationary pressures remained strong last month. Excluding volatile food and energy components, the CPI gained 0.7% in June after rising 0.6% in May. The so-called core CPI rose 5.9% in the 12 months to June. That followed a 6% increase in the 12 months to May.
High inflation and rising borrowing costs are fueling fears of a recession early next year.
With information from Reuters
