In more dismal economic news, the Consumer Price Index (CPI) rose 9.1% between June 2021 and June 2022, according to a Wednesday announcement from the U.S. Bureau of Labor Statistics, marking a fresh four-decade inflation high.
Energy prices rose 7.5% over the month of June and “contributed nearly half of the all items increase,” the agency explained. Electricity rose 13.7% year-over-year, while utility gas rose 38.4%, fuel oil rose 98.5%, and the gasoline index rose 59.9%, the largest increase since March 1980.
Prices at the pump have declined over the past several weeks to reach $4.63 per gallon as of Wednesday, according to AAA. Yet national average gas prices in early June surpassed $5.00 per gallon — a reality reflected in the most recent inflation report.
After dropping as low as $1.77 at the end of April 2020 due to declining travel activity induced by COVID and government lockdowns, gas prices rose to $2.38 in the days before President Joe Biden’s inauguration, according to the U.S. Energy Information Administration. Prices had hit $3.53 ahead of the Russian invasion of Ukraine in February before rising to their current levels.
Food prices are significantly elevated as well. The cost of food at home — meaning grocery store or supermarket food purchases — rose 12.2% year-over-year, marking its fastest increase since 1979. The price of fruits and vegetables rose 8.1%, the price of cereals and bakery products rose 13.8%, butter and margarine increased 26.3%, while meat and poultry inflation saw declines.
Indeed, rising costs for fuel and fertilizer — among the key inputs for the agricultural sector — have increased expenses for farmers. A recent report from the International Food Policy Research Institute revealed that market prices for food and fertilizer increased 125% from January 2021 to January 2022, spiking again after China introduced new fertilizer export restrictions and Russia began its invasion of Ukraine.
White House Press Secretary Karine Jean-Pierre told reporters on Monday that the Biden administration foresaw the discouraging inflation news but argued that many of the cost pressures — particularly in the energy sector — have eased since last month. “We expect the headline number, which includes gas and food, to be highly elevated, mainly because gas prices were so elevated in June,” Jean-Pierre explained. “The President’s number one economic priority is tackling inflation. And looking ahead, there are a number of reasons why we expect those high prices to ease over the coming months.”
Beyond food and energy prices, the cost of shelter rose 5.6% year-over-year, with rent expenses seeing their largest monthly increase since April 1986. The cost of new vehicles rose 11.4%, used cars and trucks rose 7.1%, apparel rose 5.2%, and the price of medical care services rose 4.8%.
Rising inflation is making consumers and businesses alike uneasy. While the University of Michigan’s most recent Survey of Consumers recently saw its lowest consumer sentiment reading since 1952, the National Federation of Independent Businesses’ (NFIB) Small Business Optimism Index saw its sixth consecutive monthly decline.
“As inflation continues to dominate business decisions, small business owners’ expectations for better business conditions have reached a new low,” NFIB Chief Economist Bill Dunkelberg remarked. “On top of the immediate challenges facing small business owners including inflation and worker shortages, the outlook for economic policy is not encouraging either as policy talks have shifted to tax increases and more regulations.”