The US inflation rate is rising even faster than experts predicted. As announced by the Department of Commerce in Washington on Tuesday, consumer prices rose 5.4 percent in June compared to the same month last year. That was once again more than in May and is the strongest increase since the outbreak of the global financial crisis in 2008. Economists had expected an average increase of only 4.9 percent.
Used cars in particular became more expensive, but also air travel, clothing, hotels, rental cars and entertainment options. However, you have to take into account that some prices even fell a year ago at the height of the first corona wave. This so-called base effect now means that the current figures exaggerate the actual development a little.
But there are also very tangible factors that drive prices up. First, there is the significantly increased demand from US consumers, who are often fully vaccinated, are hardly confronted with restrictions when shopping and, after more than a year of restraint, have their wallets partially full. In many cases, the suppliers hardly keep up with the manufacture of their products, which makes the existing goods all the more expensive.
The June figures should also be attentively registered in the US government, in Congress and above all in the Federal Reserve and will further fuel the dispute between inflation warnings and those who advise calm. Fed Chairman Jerome Powell, for example, belongs to the group that considers the unusually high inflation rate to be a temporary phenomenon and therefore rejects a significant tightening of monetary policy. As long as millions of people are still looking for jobs who have lost their jobs in the crisis, possible steps to contain inflation are premature and counterproductive, said Powell.
Other experts such as the former Treasury Secretary Lawrence Summers, however, have been warning for months that the central bank is acting too hesitantly and may have already missed the point in time to raise interest rates or at least to abandon its program to dampen long-term interest rates. The Fed’s Monetary Policy Committee will hold its next regular meeting in two weeks’ time.