By | July 14, 2022

Inflation rose in June, growing at the fastest rate over the past 40 years in a variety of industries which is driven in large part by rising energy costs.

The cost of living index for consumers was 9.1 percent more than it was when compared to the previous year and 1.3 percent more than the May reading according to the report released on Wednesday from the Bureau of Labor Statistics, showing little evidence of improvement in fighting inflation. Last time, inflation was more than 9 percent was in November 1981.

The June data revealed broad rises in the cost of the energy, housing, and food which confirmed that the issue of inflation is currently the nation’s most challenging economic problem as well as raising fears that other strengths in the economy, such as the economy’s labor market and consumer spending will not be sufficient to prevent another recession from occurring.

The main reason for the dramatic increase is the index for energy which increased 7.5 percent from May, and contributed to almost half the total rise in inflation. The index covers the cost of fuel, oil and gasoline, as well as electricity and is increasing by 41.6 percent over the course of the year, the biggest annual increase in the past 12 months since April 1980.

However, prices have also increased in many other categories that aren’t thought of as energy-dependent or volatile, like medical care, housing and clothing.

“There was not a drop of good news in this report,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “I experienced emotion when reading this report and I tried to recall the last time that I had emotions in response to an economic data release and I believe that you need to go the time of that financial meltdown. Dismay. Frustration.”

It’s evident that inflation isn’t letting go. The rising pace is putting tensions on Federal Reserve and White House to increase their responses to rising costs. They will also have to persuade that the American citizens that they can reduce the pace of economic growth without causing unemployment to rise and the economic growth to shrink all. The markets fell in response to the announcement.

“Inflation is the most pressing economic issue. It’s affecting almost every country on the planet … The fight against inflation is my number one priority and we must accelerate our progress, quicker, in bringing prices in check,” President Biden stated in a statement.

A few aspects of our daily lives are left unaffected by the rising cost of inflation. The index for food rose by one percent in June and has risen 10.4 percent over the year before, which is the highest increase in a 12-month period in the past 12 months since January 1981. The cost of chicken has gone up 19 percent in this past year, making it the largest increase since.

Prices for gas were up 11.2 percentage in June which highlights the impact that the Russian invasion of Ukraine has taken on the global energy markets. There’s a good chance that inflation figures will decrease some, given that prices for gas and energy have consistently dropped in the last month. The average national price for one gallon of gas dropped lower by a whopping $4.63 on Wednesday according to AAA.

Five charts that explain the reasons for why the inflation rate is at such a high level

Rents also increased 0.8 per cent in the month of June when compared to the previous month in the same month, as the expense of just keeping the roofing overhead is getting ever more difficult to afford for families across the nation.

“It’s important that policymakers address the public,” said Joe Brusuelas, chief economist at RSM. “At this time, we’re talking about fuel, food and housing. That’s not the recipe for happy families.”

In fact “core inflation,” a statistic that is closely examined by economists since it removes more volatile categories like energy and food and energy, was at a high level in June. It’s particularly worrying since officials must be able to see the core inflation rate turn around before they can guarantee that overall prices will go down.

Officials from the Federal Reserve and White House would like policies to crack down on inflation to produce better positive results. The Fed might have to act more effectively to slow down the pace of growth by increasing rates of interest. This is something that it has already done three times in the past year. The higher rates of interest are the primary instrument to combat inflation , as they make a variety of loans such as auto loans to mortgage rates and even borrowing for business -higher in cost which reduces demand and sluggishs the economy. If interest rates are too high, they could create more economic problems which can lead to a lot of jobs being lost.

The data for June cover the most bleak month of the year the consumer mood sank last month to levels that was not experienced since the downturn of 1980, according to an closely-watched University of Michigan survey. The decline raised concerns about there is a risk that the Fed is in danger oflosing its faith in the financial and general public which is a significant challenge in the battle against inflation.

“The culprits, as before they were well-known to the public, such as fuel, food and shelter. With their confidence at the lowest since the recession the consumer is entitled to feel extremely upset,” Mark Hamrick, the senior economics analyst for Bankrate wrote in an analyst note. “They’re facing a combination of high and sustained inflation robbing them of purchasing power.”

in Louisville, Stephanie Lott, 32, has a lot of fun stretching every bit of the $18-an-hour she earns as an accounts payable clerk. The price of gas has risen to $5 per gallon in the last few weeks. The rent she pays for her room is 600 dollars. Lott was in graduate school in order to become a teacher, however she didn’t have the money to complete her master’s degree.

Lott will send any money she can to her father in Mississippi. She says he’s fortunate by certain measures that he owns his mobile home, and has insulin to treat his diabetes, which is which is covered through Medicare or Medicaid. However, everything else is paid for by around $900 per monthly in Social Security, and now the death of his wife’s life insurance policy. Inflation is rapidly degrading his income fixed.

“It’s the cost of gas for me to go into the clinic. That’s buying grocery items” Lott said. “With my assistance I’m able to help him complete it, but just very little. We don’t know for sure what the amount of money Dad received from Mom’s life insurance policy will last.”

Inflation is causing homelessness to become more severe

The financial markets have fallen in the past year because investors are reacting in a negative way to Federal Reserve’s actions to tighten the monetary policy. The report on inflation in June led to fears of Wall Street that the Federal Reserve will have to act more quickly to bring inflation at a manageable level in the coming months.

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