Consumer prices increased 5.4% for the year ending June, according to a report by the Department of Labor.
Forecasters had expected a 4.9% increase.
Tuesday’s release, from the consumer price index, represents the highest rate of inflation since 2008.
“The outsized jump in June CPI continues to be driven by the same factors as the past few months,” said Bankrate’s chief financial analyst Greg McBride after the news. “Used car and truck prices had the biggest one month increase in history, 10.5%, and are up 45% from one year ago.”
The news comes as inflation fears percolate among some economists who worry that the rising prices are not just transitory, as the Federal Reserve contends, but might cause economic damage.
FED OFFICIALS NOW SAY THEY EXPECT TO RAISE RATES BY 2023
The central bank has maintained a controversially loose monetary policy and has vowed to keep interest rates near zero despite a glut in consumer demand as the United States emerges from the COVID-19 pandemic. The federal government has also infused trillions into the economy in order to stimulate spending, further prompting concerns of too-high inflationary pressures.
“The ‘inflation is transitory’ argument is starting to wobble,” said McBride in a statement.
Last month, St. Louis Federal Reserve Bank President James Bullard spooked the markets when he predicted an interest rate hike in late 2022, earlier than the central bank consensus. He also said that inflation was running hotter than initially expected.
Also last month, the Fed acknowledged increasing inflation by raising its end-of-year projection from 2.4% to 3.4%, although it still says the boost will be temporary, dropping to 2.1% in 2022 and then holding steady at the central bank’s 2% goal in the longer term.
JPMorgan Chase CEO Jamie Dimon recently warned that there is a decent chance that inflation might be more than transitory and said that his bank has been “effectively stockpiling” cash in case the Fed needs to hike rates in response to inflationary concerns.
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This year’s economic anxieties are compounded by what some say is a labor shortage. Certain industries, particularly retail and hospitality, are having trouble finding workers. Some companies have had to boost wages to attract job seekers, which in turn can cause price increases and even more inflation.
