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United States: inflation is at its highest in more than 40 years

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Inflation rose again in May in the United States, accelerated after a brief hiatus in April, and hit another high in 40 years, figures that would be Joe Biden’s reaction at noon from the port from Los Angeles.

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Inflation reached 8.6% year on year, against 8.3% last month, according to the consumer price index (CPI) published on Friday by the Labor Department. Over a month, the rise in prices reached 1.0%, against 0.3% in April.

These higher -than -expected numbers weigh on Wall Street, which opened lower on Friday, as the US dollar jumped against the euro.

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Housing, fuel, plane tickets, food, new and used cars, but as well as medical care and clothing, the price increase was general last month.

Energy and food prices, which have risen since the beginning of the war in Ukraine, recorded a strong increase year on year: + 34.6% for energy – the largest increase since September 2005 – and + 10.1% for food prices – the strongest increase since March 1981.

Excluding these two categories, so -called core inflation has been stable for a month, at +0.6%, and slowed further for a year, to +6.0%.

The new rise in prices weakens expectations of a long-term slowdown in inflation, the rate of which fell slightly in April, to +8.3% for a year.

yun indicates that the slowdown in inflation until the end of the year will be rapid […] and inflation ICC likely to be more than 6% in Decemberwarned Gregory Daco, chief economist of the EY-Parthenon.

Joe Biden will speak at 1:45 pm (EDT) from the Port of Los Angeles, where container ships arrive with cargoes of Asian -made goods before hitting shelves in U.S. stores

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He is calling on the House of Representatives, which is scheduled to vote next week on a text adopted in March by the Senate, to restrain shipping companies from raising their prices, as it affects the consumer.

The text states that the price of a 40ft container became $ 11,000 in September 2021 from approximately $ 1,300 before the pandemic.

Difficulties in global supply have led to rising prices around the world, which have been exacerbated in the United States by labor shortages, such as large financial aid payments from the government that have stimulated demand.

Bad news for Biden

The war in Ukraine also exacerbated the phenomenon, driving up fuel and food prices.

This very high inflation is bad for Joe Biden, a few months before an important election deadline, who will see the renewal of a large portion of Congressional elected representatives, the American Parliament. The Republican opposition accuses the Democratic President’s economic policy of being inflationary.

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The risks associated with geopolitical developments, especially for oil and food prices, remain highsaid Rubeela Farooqi, Chief Economist for High Frequency Economics.

The increase in activity in the service sector in the next few months, at the expense of purchases of goods, should however give helpand reduce pressure on the supply chain, he hopes.

The new acceleration in inflation should also convince the American Central Bank (Fed) to further tighten its key rates next week during its monetary committee meeting.

The institution is really acting, its main lever is to curb demand from consumers and businesses, through major charge increases.

It has been raised twice, by a quarter point and then a half percentage point, in the range of 0.75 to 1.00%.

Fighting inflation could weigh on the U.S. economy, even raising fears of a recession. Unemployment could rise again.

Should we be afraid of stagflation?meaning a long period of low growth and high inflation, Gregory Daco wonders: No, not in 2022, but the risks will be greater in 2023according to him.

The World Bank warned this week of the dangers of global stagflation.

Another index that measures inflation, the PCE (personal consumption expenditure), favored by the Fed, will be published by the Commerce Department, but only next month. It slowed significantly in April, to 6.3% year-on-year, and data for May will be known on June 30th.

France Media Agency

Source: Radio-Canada

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