As the Federal Reserve’s recommended inflation gauge showed, prices rose 6.8% in the year to June, even showing measures to remove food and fuel, especially on a monthly basis.
Inflation measured by Consumer Expenditure Index It has increased by 4.8% over the past year after removing food and fuel that economists do to understand the underlying trends. This is a slight increase over the 4.7% increase expected by economists in the Bloomberg survey.
These data could be on track to raise interest rates further as central banks try to cool the fastest inflation in decades. This week, the Federal Reserve is trying to slow the economy by spending money on borrowing, so it continued its second super-massive rate hike by three-quarters of a percentage point.
According to another report, wages have risen sharply. The Employment cost index In the second quarter, the index’s wage and payroll measurements also rose 5.1% year-on-year.
Most people haven’t seen wages rise fast enough to catch up with the sharp rise in prices, but wage growth is so rapid that it reaches the Fed’s annual target of 2%. It is difficult to mitigate rising prices. Companies are unlikely to stop raising prices when labor bills are skyrocketing. Doing so consumes profits and, in some cases, wipes them out.
The combination of very rapid inflation and active wage increases could keep the Fed in a mode to combat inflation. Federal Reserve Chair Jerome H. Powell said at a news conference this week that authorities could raise interest rates again by three-quarters at the next meeting in September. The Federal Reserve Board has almost two months from now to the next interest rate decision.
Headline inflation in July probably cooled as gas prices plummeted this month. However, it is not yet clear how persistent this change will be, with central banks and consumers watching prices rise for a wide range of goods and services, not just fuel.
Inflation has been high for over a year, and central banks are focusing on curbing demand and lowering it before it penetrates the US economy. Once consumers and businesses have learned to anticipate and accept sharp price increases, it can be difficult to quell them.
“I think it’s really important to work on this now and achieve it,” Powell said at a press conference this week. “The obligation to provide price stability to Americans is uniquely and unconditionally assigned. “He added. .. And we will use our tools to do that. “
