U.S. consumer prices accelerated 9.1% last month, the fastest annual pace since November 1981 and the hottest print of the current inflation cycle.
The Bureau of Labor Statistics’ June Consumer Price Index (CPI) reflected a year-over-year increase of 9.1% last month, up from the prior 40-year high of 8.6% in May. Economists were expecting June’s reading to show an 8.8% increase, according to estimates compiled by Bloomberg.
On a monthly basis, the broadest measure of inflation rose at a pace of 1.3%, inching up from 1% in May and climbing at a faster tempo than the 1.1% increase economists had projected. This marked the largest monthly increase since 2005.
The continued surge in inflation across the U.S. economy was elevated by broad-based increases, including high food costs and record gasoline prices, which topped more than $5 per gallon at the pump last month.
“Core” CPI, which excludes the more volatile food and energy components, rose 5.9% in June, compared to 6.0% in May. Economists expected a 5.7% increase in this measure.
The report’s energy index jumped 41.6 percent over the last year in June, marking the largest 12-month increase since the period ending April 1980. Meanwhile, the component of the report tracking food prices jumped 10.4 percent annually in June, the biggest 12-month increase since the period ending February 1981.
Commodity prices have been under pressure in recent weeks, however, with crude oil falling more than 8% on Tuesday.
“Are there any possible reasons for hope on the horizon? There have been some very recent constructive developments on the inflation front, including the decline in gasoline prices and crude oil falling below $100 a barrel,” Bankrate Senior Economic Analyst Mark Hamrick said in a note. “Even so, the national average for regular gas at the pump is up about a dollar and a-half from a year ago, remaining in the mid 4-dollar range.”
In addition to serving as a measure of the costs U.S. consumers dole out for everyday household items, June’s consumer price index will be pivotal in guiding Federal Reserve officials on their next policy move as the central bank tightens monetary policy in an effort to restore price stability.
June’s print is likely to prompt policymakers to move forward with another 75 basis point increase in benchmark interest rates at their next meeting on July 26-27.