The US Department of Labour reported that inflation soared rapidly in June in nearly 13 years. The inflationary phenomenon has considerably raised the costs of used cars, as well as increases in the prices of food and energy. Therefore, the Consumer Price Index (CPI) increased by 5.4% compared to the previous year, representing the highest increase since August 2008, just before the financial crisis.
CNBC consulted several experts concerned with the matter and discovered that the prices of the volatile food and energy had been excluded, after which CPI’s core rose by 4.5%. This rise is far higher in comparison to September 1991.
The television network reported that Sarah House, a senior economist at Wells Fargo, estimated that the upward trend would continue even though the government has said that inflation is only seasonal and will go away. The truth is that while this happens, millions suffer the consequences.
In this sense, the United States Bureau of Labour Statistics pointed out in a recent study that monthly increases in consumer prices are negatively impacting the value of real wages since the purchasing power of workers is being affected. Therefore, the Bureau of Labour Statistics detailed that real average hourly income fell 0.5% during the month since a 0.3% increase in average hourly income represented less than the increase in the Consumer Price Index.
According to experts and the government itself, the upward trend in practically all products has to do with supply channels, which are still facing some shortages as a result of the pandemic, so the market has not fully recovered in this situation.
Sarah House who is a senior economist at Wells Fargo’s corporate and investment bank, said in a statement that what the inflation highlights, in reality, are the pressures related to it which have remained more acute than ever praised or appreciated and will continue to stick to their side for an extended period.
Even from the Federal Reserve (Fed), it has been recognized that the phenomenon of inflation throughout the country is stronger than what was initially estimated, so it may be more durable than was anticipated. Jerome Powell, chairman of the Fed, will be in Congress on Wednesday and Thursday in the same regard. Jerome Powell is likely to speak in front of legislators on the issue and the options that can be applied to address the emergency of inflation, which already has all US citizens in predicaments. Powell has said the consequences of the hikes are temporary.