Surging prices for gas, food and rent catapulted U.S. inflation to a new four-decade peak in June, further pressuring households and likely sealing the case for another large interest rate hike by the Federal Reserve
The government’s consumer price index soared 9.1% over the past year, the biggest yearly increase since 1981, with nearly half of the increase due to higher energy costs.
“Everything goes up, including cheaper items like store brands,” said Freeman, who visited a food bank near Atlanta this week to try and gain control of her grocery costs. In recent months, as Covid fears have receded, consumer spending has gradually shifted away from goods and toward services, resulting in higher prices for vacations, restaurant meals and entertainment.
In addition, shipping costs and commodity prices have begun to fall, and pay increases have slowed. Surveys show that Americans' expectations for inflation over the long run have eased — a trend that often points to more moderate price increases over time. “There may be some relief in the July numbers — commodity prices have come off the boil, at least — but we are a very, very long way from inflation normalizing, and there is no tangible sign of downward momentum,” said Eric Winograd, an economist at asset manager AB.
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