• By The Financial District

U.S. Consumer Price Surge In June Highest Since 2008

Prices for US consumers jumped in June by the most in 13 years, evidence that a swift rebound in spending has run up against widespread supply shortages that have escalated the costs of many goods and services, Christopher Rugaber reported for the Associated Press (AP).

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Tuesday’s report from the Labor Department showed that consumer prices in June rose 0.9% from May and 5.4% over the past year — the sharpest 12-month inflation spike since August 2008. Excluding volatile oil and gas prices, so-called core inflation rose 4.5% in the past year, the largest increase since November 1991.


The pickup in inflation, which has coincided with the economy’s rapid recovery from the pandemic recession, will likely intensify a debate at the Federal Reserve and between the Biden administration and congressional Republicans about how persistent the accelerating price increases will prove to be.


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The Fed and the White House have made clear their belief that the current bout of inflation will prove temporary.


As supply chain bottlenecks are resolved and the economy returns to normal, they suggest, the price spikes for such items as used cars, hotel rooms and clothing will fade.


Some economists, along with Wall Street investors, have indicated that they agree. “The headline inflation numbers have been eye-popping in recent months, but underlying inflation remains under control,” said Gus Faucher, an economist at PNC Financial Services. “Once again a few categories — used vehicles, airfares, rental cars, hotels — are experiencing huge price gains because of the recovery from the pandemic.”


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Still, continued higher inflation does raise the prospect that the Fed could decide to act earlier than expected to pull back on its ultra-low interest rate policies, which have been intended to support more borrowing and spending. If so, that would risk weakening the economy and potentially derailing the recovery.


For now, price increases are running ahead of the wage gains that have kicked in this year, which means the financial burdens on millions of households have grown more difficult. Average hourly earnings increased 3.6% in June compared with a year earlier, normally a solid gain, but far less than current inflation.



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Happyornot makes feedback terminals measuring customer satisfaction sing smiley-face buttons.
Happyornot makes feedback terminals measuring customer satisfaction sing smiley-face buttons.