July 15, 2021—Prices for U.S. consumers rose by nearly 1 percent in June, the largest month-over-month increase in nearly 13 years.
The U.S. Department of Labor shows inflation has jumped by nearly 5.5 percent, according to the Associated Press, which is the most severe rise since August 2008. The price increases are currently outpacing the growth in wage gains—hourly wages were up by only 3.6 percent in June compared to the same time last year.
"One reason why year-over-year inflation readings are now so high is that the most recent prices are being measured against the sharp price declines that followed the eruption of the pandemic in March of last year," the Associated Press analysis read. "That statistical distortion began to fade in June and will no longer be a factor when July’s year-over-year inflation figures are released next month."
A sustained higher inflation rate could push the Federal Reserve to pull back on its "ultra-low" interest rate policies, which were put in place to encourage borrowing and spending, sooner than expected.
