Inflation Unexpectedly Hits Highest Rate in 13 Years in New Labor Dept. Report
Inflation is stalking the American economy, according to new data.
According to the Bureau of Labor Statistics, the consumer price index saw its largest increase in 13 years in June, rising 5.4 percent in 12 months. Economists had been expecting a 5 percent increase, CNBC reported.
The month-to-month increase was the highest since June 2008, the Bureau reported, while the year-over-year increase was the highest since August 2008.
The index for used cars and trucks jumped 10.5 percent, the largest increase ever recorded in that sector.
“What this really shows is inflation pressures remain more acute than appreciated and are going to be with us for a longer period,” said Sarah House, senior economist for Wells Fargo’s corporate and investment bank.
“We are seeing areas where there’s going to be ongoing inflation pressure even after we get past some of those acute price hikes in a handful of sectors.”
“This does increase some of the jitters among some [Federal Reserve] members,” House said. “There are a number of areas where inflation is picking up and likely has staying power. That’s going to make some folks nervous.”
The International Monetary Fund is among those fretting.
“There is a risk of a more sustained rise in inflation or inflation expectations, which could potentially require an earlier-than-expected tightening of U.S. monetary policy,” Kristalina Georgieva, managing director of the IMF, wrote in a blog post, according to The New York Times.
“[Fed members] have been surprised by the speed and extent of the surge in inflation as the economy has reopened,” Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote, The Times reported.
Despite growing worries, “the voices pressing for patience will remain the most powerful,” he wrote.
The Fed has insisted that this year’s inflation is a passing phenomenon driven by the economic recovery from the pandemic, according to The Times.
The cost of living rose in June by the largest amount since 2008.
Biden inflation is here.
— Senate Republicans (@SenateGOP) July 13, 2021
Love how the media are spinning inflation as a wonderful sign of economic progress under Biden pic.twitter.com/APNj3Kopub
— Joel Pollak (@joelpollak) July 13, 2021
Last month, a Trafalgar Group poll showed nearly 40 percent of Americans believe the policies of President Joe Biden are responsible for the rise in inflation.
Biden’s big spending was cited by economist Lawrence Summers as a possible catalyst for rampant inflation.
“There is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability,” he wrote in a February column for The Washington Post.
Former President Donald Trump last month predicted inflation would be “rampant” and “very bad,” according to Fox Business.
“We had energy independence when I left [office]. Gasoline was $1.87, now it’s going to be double that. It’s going to be triple and quadruple that,” Trump said.
“Food prices, everything, lumber for a house is up at a level that it’s never been so it costs much more for housing. It’s inflation.”
This article appeared originally on The Western Journal.