Inflation Rises Across The Globe, White House Blames War On Ukraine
GLOBAL - The U.S. inflation rate hit 9.1% for the month of June as the cost of purchasing things rise, not just in the United States but in numerous countries across the globe, with 37 of 44 developed nations having at least two times the inflation that they had in the first quarter of 2020, according to PEW Research Center.
Although the U.S. Bureau of Labor Statistics stated that the inflation rate was at 8.6% in the month of May, the highest level since 1981. The consumer price index (CPI) for the month of June increased to 9.1%, which is even above the Dow Jones estimate for that month.
Costs for energy and gas, groceries, rent, and dental care have also risen, while hourly wages decreased by 1% for the month after adjusting for inflation putting hourly wages down 3.6% from the same month last year.
Core CPI, which was expected to rise 5.7 percent actually rose 5.9 percent. Robert Frick, corporate economist at Navy Federal Credit Union was quoted by CNBC as saying, "CPI delivered another shock, and as painful as June’s higher number is, equally as bad is the broadening sources of inflation."
"Though CPI’s spike is led by energy and food prices, which are largely global problems, prices continue to mount for domestic goods and services, from shelter to autos to apparel," he added.
James Knightley, ING’s chief international economist said, "U.S. inflation is above 9%, but it is the breadth of the price pressures that are really concerning for the Federal Reserve. With supply conditions showing little sign of improvement, the onus is on the Fed to hit the brakes via higher rates to allow demand to better match supply conditions. The recession threat is rising."
Energy prices were also up 7.5% for the month of June and had risen 41.6% above what they were a year ago. The cost of shelter rose 0.6% for the month, and 5.6% above what it was a year ago.
The cost of rentals rose by 0.8% for the month, the largest increase since 1986, according to the BLS. Gasoline also rose by 11.2% in June, 60% higher than the price of gas 12 months ago. Airline fares fell by 1.8% but were up by 34.1% from one year ago.
Stats For The Month Of June:
Core inflation in June: 9.1%, energy prices: +7.5%, gasoline price: +11.2%, electricity: +1.7%. Cost of new vehicles: +0.7%, used vehicles: 1.6%.
Medical care: 0.7%, dental services: 1.9% which is the largest rise since data began to be recorded in 1995. Airline fares: -1.8%, meat, fish and poultry: -0.4%.
Change From Last Year:
Gas: +60%, electricity: +13.7%, airline fares: +34.1%, meat, fish and poultry: 11.7%.
The Federal Reserve is continuing to hike the interest rates up in order to curb the rising inflation and get it back down to around 2%.
While the White House blames inflation on the ongoing war in Ukraine, inflation had been shooting up before Russia's invasion of Ukraine began. The blame has also been placed on greed from large corporations for taking advantage of the global situation and raising their prices, but after-tax profits for corporations are only reported to have risen by 1.3%. according to CNBC.
The United States isn't the only country dealing with inflation, however. Inflation rates have doubled in 37 of 44 advanced economies over the last two years time, according to Pew Research Center analysis.
Turkey has the highest inflation at 54.8% in the first quarter of 2022. In the month of June, Turkey's inflation rose to 73.5% in the month of May, and 78.6% in the month of June, as their inflation rate nears the 80% mark.
Nations such as the United States and South Korea are attempting to combat inflation with unprecedented interest rate hikes.
South Korea increased its interest rate by half of a point on Wednesday, while the U.S. Federal Reserve agreed to raise U.S. interest rates by 0.75 percentage points in the month of June, which Federal Reserve Chairman Jerome Powell called an "unusually large" increase.
"Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common," he had stated in June and added that he expects there will be an increase of 50 or 75 basis points for the month of July.
"We want to see progress. Inflation can’t go down until it flattens out. If we don’t see progress ... that could cause us to react. Soon enough, we will be seeing some progress," Powell added.