Customers shop at a supermarket in Washington, DC, the United States, on July 13, 2022. (Photo by Ting Shen/Xinhua)
WASHINGTON – United States consumer prices exploded upwards last month, marking the latest high in surging inflation.
All eyes are now on the US Federal Reserve, as the bank could continue its aggressive rate path on the news.
"Today's shockingly high consumer price inflation number does not bode well for our country's economic outlook," Desmond Lachman, resident fellow at the American Enterprise Institute, told Xinhua.
US consumer prices skyrocketed a whopping 9.1 percent last month, the fastest annual clip since November 1981, as inflation keeps rising, according to the US Bureau of Labor Statistics.
June's consumer price index rose from the previous 40-year high of 8.6 percent in May and was higher than the 8.8 percent increase forecast by Bloomberg.
Sam Bullard, senior economist at Wells Fargo, a major US bank, told Xinhua, "It came in hotter than expected."
"Everyone pretty much knew energy prices were going to be a large contributor," Bullard said.
"And that turned out to be the case – it was about half of last month's contribution" to the month-over-month rise, he added. "Everything's about what's the Fed going to do next.”
The Fed last month hiked rates by 75 basis points, the biggest hike since 1994, and some economists fret the central bank will implement yet another rate hike that could be even higher.
Lachman said the report "makes it all but certain that the Federal Reserve will continue with its policy of aggressively raising interest rates."
The Fed will likely do so despite growing signs of economic and financial market weakness both at home and abroad, he said.
That has to raise the risk of a hard economic landing before year's end, Lachman said.
Inflation will soon peak, according to Lachman.
But it will do so as a result of the US and world economy moving into recession, he said.
Dean Baker, senior economist at the Center for Economic and Policy Research, told Xinhua, "It is probably a done deal that the Fed will raise rates by 0.75 pp this month."
"The big question will be what they say about future hikes," Baker said.
Baker said some of this jump was predictable.
"We knew gas prices would rise a lot in June. We also knew there would be high numbers for rent. The surprises were that the June rent increase was larger than the May one," he said.
"I still expect a sharp slowing in inflation, but I have been saying that for a while."
Brookings Institution Senior Fellow Barry Bosworth told Xinhua the breadth of the price increases was "striking" and "mandates a strong Fed response – a 0.5 to 0.75 rate increase."
The vulnerability to strong inflationary pressures remains intense, largely due to energy market uncertainty and overheated labor demand, Bosworth said.
The ongoing inflation surge was elevated by a rise at the cost of food, as well as record-high gasoline prices, according to Wednesday's report.
At one point last month, gas rose above USD5 per gallon, the highest in US history.
Meanwhile, White House officials this week scrambled to prepare for what they expected to be a hot inflation rate, although they insisted gasoline prices are lowering, reported Axios, a US newspaper.
Brookings Institution Senior Fellow Darrell West told Xinhua that Wednesday's inflation rise was a "really bad number for Democrats because the trendline still is going up."
"As long as that continues, it will harm their prospects in the fall," West said, noting the midterm elections in November. (Xinhua)
