(Washington) Prices soared again in June in the United States, inflation reaching 9.1% due in particular to the explosion of gasoline prices, which increases the pressure on Joe Biden, summoned to act for household purchasing power.
Updated July 13
This increase, the strongest over one year since November 1981, threatens growth insofar as consumption is the main engine of the US economy.
It also weighs on the popularity of the Democratic leader a few months before an important electoral deadline with the renewal of a large part of the elected members of Congress.
The consumer price index (CPI), which had already climbed 8.6% in May year on year, jumped in June even more than analysts expected.
The consumer price index supposed to better reflect core inflation, the one that excludes the most volatile sectors such as energy and food, posted a gain of 5.9% in June 2022 compared to June 2021.
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 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 acknowledged in a statement 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.
The average price per gallon (about 3.8 litres) in the United States has in fact fallen back to about $4.63 currently, after having climbed for the first time in June above the symbolic threshold of $5.
This “should bring some respite to American families,” Biden said.
Consumers had accumulated significant savings during the COVID-19 pandemic, thanks in particular to substantial state aid and spending limited by containment measures and activity restrictions.
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 Russia’s invasion of China. Ukraine at the end of February.
Rise in rates by one point?
The rise in prices in June affected all sectors, the Labor Department said in a statement. But the biggest contributors to this increase were housing, gasoline and food, expenses at the heart of daily life.
Energy prices in particular rose 41.6% year-on-year, recording their strongest rise since April 1980.
As for food prices, they experienced their strongest increase since February 1981, increasing by 10.4% over one 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.
This slight slowdown and the slight drop in prices at the pump should not be enough to prompt the US central bank (Fed) to ease its current policy, however.
The Fed began aggressively raising interest rates in March to dampen demand and calm this rise in prices. It even raised them by three-quarters of a percentage point in June, its biggest increase since 1994.
These rates, which set the tone for loans granted to individuals and businesses, are now in a range of between 1.50% and 1.75%.
For Ian Shepherdson of Pantheon Macroeconomics, underlying inflation should continue to decline over the coming months, in particular due to lower wage increases, the fall in commodity prices and the rise in the dollar, which makes imports cheaper for Americans.
But the latest inflation numbers “are going to make the Fed very uncomfortable,” he predicts.
The central bank is expected to raise rates by another three-quarters of a point at its next two meetings, in July and September, says Kathy Bostjancic of Oxford Economics.
Others evoke the scenario of a rate hike of one point, which would be a first since the 1980s.
This open door to an even stricter monetary policy in the United States temporarily caused the euro to plunge on Wednesday below the symbolic threshold of one dollar, which had not been crossed since December 2002.
This idea also tensed Wall Street, where the main indices ended in the red.