U.S. consumer prices increased at its highest rate in 13 years in June despite being hampered by supply constraints and continued increases in service costs.
The Consumer Price Index (CPI) rose 0.9% last month, the biggest increase since June 2008, after rising 0.6% in May, as reported by the Department of Labor on Tuesday.
In the 12 months to June, the CPI jumped 5.4%. The reading is the biggest increase since August 2008 and follows a 5.0% increase in the 12 months to May. Regardless of the volatile food and energy component, the CPI rose 0.9% after rising 0.7% in May.
At the same time, the core CPI also recorded the largest surge since November 1991, having risen 3.8% in May to 4.5% per annum in June. Overall, the CPI reading far surpassed the forecasts of economists who targeted the CPI to rise by 0.5% and the core CPI to rise by 0.4%.
The Covid-19 vaccination program, low interest rates and nearly $ 6 trillion in government aid since the outbreak in the United States have spurred demand, weakened the supply chain and driven up prices.
The global semiconductor shortage has reduced the production of motor vehicles, indirectly pushing up the prices of used cars and trucks which have been the main drivers of inflation in recent months.
On the other hand, some areas in the United States with low vaccination rates, however, are experiencing a surge in infections from the Delta variant that could slow economic activity. This indirectly lowered U.S. Treasury yields. in the last week.
According to David Kelly, head of global strategy at JPMorgan, the growth of the economic recovery will slow slightly for the next few months and inflation rates are likely to subside from high levels. However, it is still possible that the economy will move faster and maintain inflationary growth at current levels.
Federal Reserve Chairman Jerome Powell has repeatedly stated that higher inflation will be temporary, stressing that he expects the supply chain to return to normal.
The US dollar index continued to appreciate against major currencies following the release of the inflation report with a strengthening of 0.47% to the exchange rate of 92.695.
