U.S. Inflation Rises To Highest Annual Rate Since 1981

U.S. consumer prices surged 9.1% in June, the largest annual increase in more than four decades amid stubbornly high costs for gasoline, food and rent. The consumer price index increased 1.3% last month, the biggest monthly gain since September 2005, says Reuters.

The acceleration of the headline CPI inflation in the US at +9.1%yoy is for the month of Jun-22 (May-22: +8.9%yoy). This is the fastest price increase in 41 years and higher than market consensus of +8.8%yoy.

The higher inflation was driven by across various prices including foods, energy, housing, apparels, education, medical care, and transport.

The core CPI inflation was also higher than expected, although it moderated for the third straight month to +5.9%yoy.

With inflation remains at high level, still above the Fed’s 2% long-term target, we expect the Fed to proceed with its aggressive rate hike to contain the high inflation in the US.

Apart from the still high inflation data, the recent update also shows stronger-than-expected job creation, indicating conditions in the US labour market remained robust.

“Although demand pressures, as measured by the increase in core CPI, on moderating trend from the recent peak in Mar-22, the level is still around 40-year high.

“Thus, we opine Fed policymakers will consider another large increase in fed funds rate possibly by 75bps at the next FOMC meeting later this month,” says MIDF.