The June data showed broad increases in the prices of food, energy and housing, confirming that inflation is now the nation’s most challenging economic problem, while raising new fears that other sources of strength in the economy — like the labor market and consumer spending — won’t be enough to fend off another recession.
Driving the stunning jump was the energy index, which rose 7.5 percent compared to May and contributed nearly half of the overall increase in inflation. That index includes prices for fuel, oil, gasoline and electricity, and it’s up 41.6 percent for the year, the largest 12-month increase since April 1980.
Yet prices also increased in lots of other categories that aren’t considered as volatile or energy-dependent, including housing, medical care and apparel.
“There was not a drop of good news in this report,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “I had an emotional reaction to this report, and I was trying to think about the last time I had an emotional reaction to an economic data release, and I think you have to go to back to the financial crisis. Dismay. Frustration.”
What’s clear is that inflation is not letting up. The upward momentum is compounding pressure on the Federal Reserve and White House to ratchet up their response to rising prices. They also must convince the American public that they can successfully slow the economy…
