Inflation in the United States accelerated to 9.1% year-on-year and is the highest since 1981

Inflation in the United States accelerated to 9.1% year-on-year and is the highest since 1981

“Tackling inflation is my top priority,” Biden said.

The consumer price index in the United States it registered a rise of 1.3% in June, which placed the record for the last twelve months at 9.1%, with which it reached the highest mark since November 1981 to datereported this Wednesday in Washington the Bureau of Labor Statistics (BLS for its acronym in English).

The increase was generalized and the fuel, housing and food items were the ones that showed the most increases.

With these rises, inflation in the last 12 months climbed 9.1%, the highest since November 1981, according to the BLS on its website.

The energy index rose 7.5% during June and contributed almost half of all the increases, with the fuel category advancing 11.2%, while food increased 1% on average.

The so-called core inflation rose 0.7% in June, after marking an increase of 0.6% in the previous two months; while in the last year it accumulated an advance of 5.9%.

The official report specified that the energy index accumulated an increase of 41.6% in the last year, the largest increase of 12 months since the period ending in April 1980.

Meanwhile, the food index increased 10.4% for the 12 months ending in June, also the largest increase for the same period since February 1981.

There is pressure on the FED, which is thus heading for another big rise in interest rates at the end of this month.
There is pressure on the FED, which is thus heading for another big interest rate hike later this month.

The sharp rise in inflation now leaves the door open for the Federal Reserve (FED) to adopt an even more aggressive position, in raising interest rates, at its next meeting scheduled for July 26 and 27.

For some analysts, a percentage point increase is now more likely to happen, according to a measurement of inquiries from the Chicago Mercantil Exchange Group (CME Group), carried out through the FedWatch tool.

Fed directors have struggled to find an adequate response to a situation that has been aggravated by cuts in supply chains and excessive demand for goods and services.

Trillions of dollars pumped in financial stimulus related to the Covid pandemic have left consumers flush with cash and grappling with higher prices.from the early days of the Reagan administration.

So far, the Fed has implemented a series of interest rate hikes that have raised short-term borrowing costs by 1.5 percentage points. The agency is expected to continue raising the federal funds rate until inflation approaches its long-term target of 2%.

White House officials have attributed the rise in prices to Russia’s invasion of Ukraine, although inflation was already rising aggressively before the attack in February.

President Joseph Biden called on gas station owners to lower fuel prices.

The administration and top Democratic leaders have also blamed what they call “greedy corporations” for using the pandemic as an excuse to jack up prices.

However, after-tax corporate profits rose just 1.3% overall from the second quarter of 2021, when inflation picked up.

In a statement following the report, President Biden said that “tackling inflation is my top priority” and repeated earlier calls for oil and gas companies to lower prices and for Congress to vote on legislation that he says will reduce the costs of various products and services.

Some economists believe that inflation could be reaching a peak in the short term. Gasoline prices, for example, have fallen from a staggering $5 a gallon (equivalent to $1.33 per liter) reached in mid-June at an average of $4.63 per gallon ($1.22 per liter) today, nationwide, still much higher than a year ago.

Hence, the tour that Biden will undertake in the Middle East acquires special relevance and where the summit with the Saudi crown prince Mohammad Bin Salman stands out, from whom he will demand a greater increase in crude oil production to lower prices, to mitigate its effect on the inflation.

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