The rise in prices in June broke a record in 13 years: what has risen in price the most

Over the past 13 years, US prices have risen the most over the month in June this year. This came amid limited supply and continued recovery in service costs fueled by the pandemic, and as the economic recovery picked up steam. Writes about it Yahoo!.

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With used cars and trucks accounting for more than one-third of the price spike reported by the Labor Department, economists still believe the rise in inflation is temporary, in line with Federal Reserve Chairman Jerome Powell.

The consumer price index rose 0,9% last month, the largest gain since June 2008 after rising 0,6% in May. Economists had forecast that the consumer price index would rise only 0,5%. Prices for used cars and trucks increased by 10,5%. This was the biggest leap since January 1953, when the government began tracking the numbers. Used cars and trucks have been a major driver of inflation in recent months.

They rose by a record 45,2% year over year. A global semiconductor shortage is undermining car production. Prices for new cars have also risen sharply. Demand is mainly driven by rental companies desperate to restock after shrinking garages in the midst of the pandemic. Industry data shows that the prices of used cars and trucks will soon come down.

On the subject: Rapid inflation: US price increases beat 2008 record

But there are signs that inflation is spreading beyond sectors at the center of the recovery, with consumers paying more for food, gas, rent and clothing in the past month.

White House officials are cautiously optimistic that the current price hike will be temporary, citing the continued fall in prices for lumber and other commodities that have surged as a result of supply shortages. Steel production has also grown significantly over the past few months, they said.

In the 12 months to June, the CPI jumped 5,4%. This was the largest increase since August 2008. Excluding volatile food and energy prices, the CPI rose 0,9% after rising 0,7% in May. The so-called core index rose 4,5% year on year, the largest increase since November 1991.

Wall Street stocks were mixed. The dollar rose against a basket of currencies. Long-term US Treasury bond prices also rose.

The US central bank has cut its benchmark interest rate to near zero and is pumping money into the economy through monthly bond purchases. He made it clear that he could tolerate higher inflation for some time to compensate for years in which inflation was below the 2% target.

The preferred inflation indicator, the price index for basic personal consumption expenditure, jumped 3,4% in May, the largest gain since April 1992. The minutes of the meeting of the Federal Reserve System (FRS) on June 15-16 showed that the Central Bank as a whole decided that it is necessary to be ready to act, as there are risks of further inflation growth.

"The fact that the recent surge in inflation has been dominated by a few categories should give Fed policymakers confidence that this is mostly a temporary increase, and the market appears to share that view," said Michael Feroli, an economist at JPMorgan in New York. York.

With nearly 160 million Americans vaccinated, travel demand is on the rise. The cost of rental housing, including accommodation in hotels and motels, increased by 7,9%. Airline prices increased by 2,7%. While inflation has likely peaked, it is expected to remain high through part of 2022 as prices for many travel-related services remain below pre-pandemic levels.

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Some of the factors contributing to the rise in inflation may still last longer than next year. In June, rents have risen significantly and may rise as workers return to offices and larger cities.

Labor shortages, even though millions of Americans are unemployed, also drive up wages and keep inflation high. Due to the lack of affordable childcare, some parents stay at home. The pandemic has also triggered early retirement, resulting in a shrinking workforce.

“It’s hard to say that things will be back to normal in a few months,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University in Los Angeles. — Once eviction restrictions are lifted, rents will no longer remain at a minimum. The housing shortage will continue to drive up rents.”

But the course of inflation is likely to be driven by consumer and business perceptions.

“The big concern is that the current high inflation is built into consumer and business expectations that will lead to higher long-term inflation, as happened in the 1970s,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “However, the temporary nature of current inflation pressures and the Fed’s vigilance should prevent this from happening.”

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