US inflation hits 40-year high of 9.1% as recession fears loom

President Joe Biden called the inflation rate 'unacceptably high' but urged Americans to remain calm.

Inflation in the US reached a more than four-decade high in June, as fears of a recession loom.

The consumer price index (CPI), which is a broad measurement of goods and services linked to the cost of living, jumped 9.1% from a year ago, according to data released by the Bureau of Labor Statistics on Wednesday.

That exceeded the Dow Jones estimate of 8.8%, and is up from a 8.6% increase in May. It represents another month of the fastest hike in inflation since November 1981.

The core CPI, which excludes volatile food and energy costs, increased 5.9%, which is more than the 5.7% estimate. Meanwhile, core inflation hit a 6.5% high in March and has been trending downward since then.

President Joe Biden on Wednesday urged Americans to remain calm despite the new report, pointing out that gas prices have dropped and that his administration is working to fight inflation.

‘While today’s headline inflation reading is unacceptably high, it is also out-of-date,’ said Biden, referring to gas prices falling 40 cents since mid-June.

‘Those savings are providing important breathing room for American families. And, other commodities like wheat have fallen sharply since this report.’

However, Bank of American analysts predict that the Federal Reserve will take more aggressive actions to combat inflation, which could edge the country into a recession.

‘Spikes can reverse quickly, but underlying inflation tends to move in a gradual lagged fashion with respect to the economy,’ wrote the analysts, according to Fox Business. ‘It is going to take time to cool off the labor market and even more time to lower labor cost-driven inflation.’ 

Nearly half of traders expect the Federal Reserve will raise interest rates by one point, which would mark the biggest hike in 40 years. The Fed raised the interest rate by 0.75% last month, the biggest increase since 1994.

Also on Wednesday, the euro fell below the dollar for the first time in nearly two decades. The euro zone inflation is at 8.1%.

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