Inflation in the United States increases 1.0% and reaches 6.8% in one year

The inflation in the United States it increased again in June after remaining stable in May, according to the PCE index, used as a reference by the Fed and published this Friday by the Department of Commerce.

Prices rose 1.0% from May and 6.8% from June 2021fueled by energy and food.

Excluding the prices of energy and food, which have increased considerably since the beginning of the war in Ukrainethe so-called core inflation also accelerated, 0.6% in one month and 4.8% in one year.

Read here: The US Federal Reserve raises interest rates 0.75 points for the second time in two months

The other indicator of inflation, the CPI index, published by the Department of Labor and used in particular to calculate pensions, showed a price increase of 9.1% year-on-year in June.

Household spending, for its part, increased strongly in June, by 1.1%powered by energy, housing and health.

Household income remained stable compared to May (+0.6%), mainly reflecting, according to the Department of Commerce, “wages increases”, particularly within private companiesand “owners’ income”, as rents have skyrocketed since the start of the covid-19 crisis.

The savings to disposable income rate continued to decline to 5.1%. It had skyrocketed during the pandemic due to lower spending on travel or restaurants, as well as government aid, reaching the unprecedented level of 33.8% in April 2020.

These savings helped sustain consumptionbut expenses arising from supply-related interruptions increased inflation, which caused the “overheating” of the economy.

The US economy, however, is starting to slow down, a prerequisite for prices to stop rising.

The gross domestic product (GDP) of the United States contracted again in the second quarter, 0.9% in annual projectionafter already falling 1.6% in the first quarter.

It is now being debated whether the “classic” definition of a recession – two consecutive quarters of falling GDP – should be applied in this case to the United States, because the unemployment rate, in particular, is very low, according to the Joe Biden administration and many economists.

the euro falls

The euro depreciated to the value of $1.0150after the publication of the inflation data for the United States, although it had previously been stable above $1.02.

You may be interested in: US economy shrinks 0.2% and enters technical recession

The euro was exchanged at 1.0170 dollarsversus $1.0160 in late European forex trading the previous day.

The European Central Bank (ECB) set the reference exchange rate for the euro at 1.0198 dollars. The single currency was traded in a fluctuation band between $1.0148 and $1.0251.