The consumer price index (CPI) continues to soar in the United States. In June, prices rose again, with inflation reaching 9.1% due in particular to the explosion in gasoline prices.
This increase, the largest over one year since November 1981, threatens growth insofar as consumption is the main engine of the country’s economy. It also weighs on the popularity of Joe Biden a few months before an important electoral deadline with the renewal of a large part of the elected representatives of Congress.
The CPI, which had already climbed 8.6% in May year on year, jumped in June even more than analysts expected. Over one month, the increase amounted to 1.3% in June, against 1.0% in May, according to figures published by the Labor Department.
Republicans tackle Biden
Republicans reacted quickly on Twitter, with Senator Marco Rubio accusing the Democrats, for example, of “not caring about the things that matter to the average American”. Joe Biden for his part acknowledged that these figures were “too high” and recalled that the fight against inflation was his “priority”. But, he immediately added as if to clear himself, they are “obsolete” because gasoline prices have fallen in recent weeks. This “should bring some respite to American families,” he said.
Consumers had accumulated significant savings during the Covid-19 pandemic, thanks in particular to substantial state aid and spending limited by containment measures. But the strong recovery in demand last year, combined with problems in supply chains, fueled high inflation, which worsened with the spike in energy prices triggered by the war in Ukraine.
+10.4% year on year for food prices
The rise in prices in June affected all sectors. But the biggest contributors to this rise were housing, gasoline and food. Energy prices in particular rose by 41.6% over one year, recording their strongest rise since April 1980. As for food prices, they experienced their strongest rise since February 1981, increasing by 10.4% over a year.
Excluding more volatile food and energy prices, so-called core inflation accelerated a little over one month, to +0.7%. But it has calmed down over a year for the third month in a row, at +5.9%. Vacation rentals and airline tickets were among the few goods and services to decline in June.
The American Central Bank (Fed) should therefore not relax its current policy. It began in March to raise interest rates aggressively to dampen demand and calm this rise in prices. It even raised them by three quarters of a point in June, its largest increase since 1994. These rates, which set the tone for loans granted to individuals and businesses, are now in a range between 1.50% and 1.50% .75%.