Inflation reached 9.1% in June, spiking to its highest level since November 1981 as Americans faced record gas prices, soaring rents and abnormally high grocery bills. From May to June, the Consumer Price Index (CPI), a closely watched inflation gauge that measures what consumers paid for goods and services, rose 1.3%.
The core CPI, or the price of goods excluding volatile food and energy costs, was 5.9% on an annualized basis. The core index climbed 0.7% from May to June.
Prices were up across the economy, with gasoline far outpacing other categories with an 11.2% gain over the prior month. The national average cost of a gallon of unleaded gas peaked at about $5 this past month. The national average for a gallon of gasoline on Wednesday was $4.63, more than 2¢ below Tuesday’s price, according to the AAA motor club. Gasoline has fallen 17¢ over the past week and 37¢ over the past month. The price is still well above the $3.15 motorist paid a year ago.
Month over month, the pace of food price increases slowed slightly, to a growth of 1% in June, down from 1.2% the previous month. The data showed broad price increases across most food categories, with especially sharp increases in butter, sugar, sweets and flour. In June, there was some relief in beef, pork, poultry, fish and egg prices, which have driven rising grocery bills this year, compared to the previous month.
Market Impact
The two-year Treasury yield, which is closely tied to expectations for interest rate increases from the Federal Reserve, shot higher after the inflation data was released, rising 0.12 percentage points to 3.14%. The information cements expectations the Federal Reserve will deliver another large interest rate increase this month. Now the odds are 41.6% for a 1% hike by the Fed; 58.4% odds of 75 basis points.
