The forecasts failed, but due to excessive optimism despite the fact that they were already negative. Inflation continues to ride at a record pace in the United States, installed at a peak that dates back more than four decades. Prices rose 9.1% in June in the annualized index, well above the 8.8% forecast by analysts and even more than the 8.6% in May. Such a record has not been seen for 41 years.
The message of fear due to the weakening of the economy is beginning to sink in among citizens. The wage increase, the largest in recent times, is more than diluted with the cost of daily consumption products that are put on the table. Fuel continues to be installed at a price well above four dollars a gallon, one of the data that most demoralizes this society. The shopping basket rose by 1.3% from May to June, above the forecast 1.1%, which dwarfs the 1% figure from April to May.
It adds up and continues in an issue that has become the main concern of Americans, in whom the fear of a recession lurks, with companies that are already beginning to announce a slowdown in hiring or are even preparing to turn off the tap of a labor market so far very strong.
The Dow Jones fell 400 points on the release of the consumer price index update. All this confirms that the Federal Reserve (Fed) will maintain its aggressive policy of raising interest rates up to three-quarters of a point at its next meeting, after receiving multiple accusations for allegedly underestimating the economic circumstances after the impact of the pandemic and the effects of war in Ukraine due to the Russian invasion.
However, from the White House, in the midst of a storm over this issue that affects ordinary voters more than anyone, and from the opinion of many experts, it is clarified that the price increase could have reached its peak since that the price of gasoline has been cooling since the end of June and throughout this July. The gallon (3.78 liters) reached five dollars on average in the middle of last month and this week it is at 4.65.
Without going any further, and given the expectation of a bad inflation figure (perhaps not as bad as this 9.1%), President Joe Biden tweeted that fuel had been down for 28 days.
However, the rise in prices in June was faster and broader than expected, with gasoline in frightening figures, with the increase in rents and supermarket bills that get fatter for the same or less amount of products in carts.
If materials as volatile as food and energy prices are excluded, the so-called heart of the price index increased 5.9%, compared to 5.7% in previous estimates. Month on month, this increase was 0.7%, against the 0.5% forecast. This widespread increase made analysts reflect that perhaps they were erring in their optimism in thinking that the ceiling had been reached.
Energy prices rose by 7.5% and this represents a rise of 41.6% on the annualized basis. Food rose 1%, while the cost of housing, which accounts for a third of the core of the index, grew 0.6% this past month and stands at 5.6% annualized. This is the sixth consecutive month that food and housing grew by at least 1%.
Month on month, rents soared 0.8% in June, the largest monthly increase since 1986. The main part of this increase comes from gasoline, with a price increase of 11.2% in one month, which makes that reaches a total of 60% in a period of one year. The cost of electricity rose by 1.7% and this makes it 13.7% per year. New and second-hand cars posted increases of 0.7% and 1.6%, respectively.
