After may’s hope that inflation in the United States would soon begin to slow, came the June shock. The annual rate of growth of the price level in the US has increased to 9.1 percent and is the highest in 41 years.
Rising fuel and healthcare prices
The annual inflation rate was thus higher than expected in June. It also surprised the rise in the price level from month to month. The month-on-month inflation rate reached 1.3 percent in June, the highest since September 2005. In May, prices rose by only a flat percentage in the month-on-month comparison. The main reason for the acceleration of price growth is the increase in the price of fuel, food, healthcare and housing.
Fed Can Raise Interest Rates at Record Rates
In the context of surprisingly high inflation, there is more speculation among investors about the impact of interest rate hikes by the Federal Reserve. The Fed may raise the base rate by a full percentage point at its July meeting in less than two weeks.
“Everything is in play,” Fed Atlanta chief Raphael Bostic said when reporters asked him how likely such an increase was. The latest interest rate hike was the highest since 1994, by 0.75 percentage points. So it is now realistic that the Fed would break its nearly 30-year record.
