US inflation spirals out of control; climbs to a new record of 9.1% and puts pressure on the Fed | Economy

A new peak since the eighties, which this time is already close to double digits. Data from the consumer price index (CPI), the main tool for measuring inflation, shows an increase of 9.1% in June compared to the previous year, the fastest annualized pace since 1981. In monthly rate, prices They climbed 1.3% in their monthly rate and the monthly subjacent inflation, discounting the most volatile prices of energy and food, rose 0.7% last month. The rise was fueled by higher gasoline prices, rising rents and sharply higher grocery prices.

The data exceeds the forecasts of the experts, who pointed to a rise of 8.8% and 1.1%, respectively. Even the White House had been cured in health, warning that a “very high rate of inflation would be registered in June because of the price of gasoline,” spokeswoman Karine Jean-Pierre explained on Wednesday. In May, the rise was 8.6% and 1%, respectively. For the Joe Biden Administration, inflation at its highest is the worst possible asset for the mid-term elections in November.

The increase has been across the board, with gasoline, housing and food indices the largest contributors. The energy index rose 7.5% during the month and contributed almost half of the increase, with the price of gasoline 11.2% more expensive. As for food, according to data published this Wednesday by the US Bureau of Statistics, it rose 1% in June.

The rapid tightening of monetary policy in the US to contain price pressure fuels growth concerns and makes markets nervous. The latest inflation data encourages the Federal Reserve to make another big rate hike, with a likely three-quarter percentage point hike at its next meeting later this month.

US stock futures were higher at the open in a cautious market dominated by a gloomy economic outlook, but not by as much, and fell sharply after the release of the CPI data. S&P 500 and Nasdaq 100 futures posted modest gains after another volatile session on Tuesday that ended with both gauges in the red. Treasuries ticked lower, although a key part of the curve remains inverted, a potential sign of recession ahead. The 10-year yield at one point was 12.4 basis points below the 2-year rate on Tuesday, a level not seen since 2007.

The incipient signs of relief that economists used before the publication of the CPI for June pointed to the modest but sustained drop in gas prices. This is too recent a decline to be reflected in the June data, but experts say it could help reverse the upward trend. Almost all analysts considered that this may be the last historical peak of inflation, since, apart from the price of energy and food, the inflation trends of all other goods are beginning to moderate. Target, like other big retailers, recently reported that it was having trouble clearing out its inventory, showing an incipient restraint on the part of the American consumer. The relief, in any case, seems to be slow.

The International Monetary Fund has cut its growth projections for the US economy and warned that a general increase in inflation poses “systemic risks” for both the country and the world economy. Employment data in June, more positive than expected, dispel fears of recession and encourage the Fed to raise rates further.