US inflation hits a 40-year high of 9.1% as recession fears surface

US inflation rose 9.1% yoy in June

US inflation rose 9.1% yoy in June (Image: AFP)

US inflation hit a high in more than four decades in June as recession fears surface.

The consumer price index (CPI), which is a broad measure of goods and services related to the cost of living, rose 9.1% from a year earlier, according to data released by the Bureau of Labor Statistics on Wednesday.

That beat the Dow Jones estimate of 8.8% and is up from an 8.6% gain in May. It’s another month of the fastest rise in inflation since November 1981.

Core CPI, which excludes volatile food and energy costs, rose 5.9%, up from the 5.7% estimate. Meanwhile, core inflation peaked at 6.5% in March and has been trending down since.

President Joe Biden on Wednesday urged Americans to remain calm despite the new report, noting that gas prices have fallen and his administration is working to fight inflation.

“While today’s headline inflation is unacceptably high, it’s also out of date,” Biden said, referring to gas prices that have fallen 40 cents since mid-June.

“These savings provide important breathing space for American families. And other commodities like wheat have fallen sharply since this report.’

But Bank of American analysts predict the Federal Reserve will take more aggressive action to fight inflation, which could push the country into a recession.

“Spikes can reverse quickly, but underlying inflation tends to be gradually lagging relative to the economy,” the analysts wrote, according to Fox Business. “It will take time to cool down the labor market and even more time to bring down labor-cost-driven inflation.”

Almost half of traders expect the Federal Reserve to raise interest rates by one notch in what would be the biggest hike in 40 years. The Fed raised interest rates by 0.75% last month, the largest hike since 1994.

Also on Wednesday, the euro fell below the dollar for the first time in almost two decades. Inflation in the eurozone is 8.1%.

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Justin Scacco

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