US inflation hits 9.1%, its highest rate in 40 years

President Joe Biden describes latest reading as 'unacceptably high' but out of date

Driven by record-high petrol prices, the US consumer price index jumped 1.3 per cent last month, the Labour Department reported. AFP

President Joe Biden criticised the latest data showing US inflation had last month reached a 40-year high and said the figure failed to account for the “nearly 30 days of decreases in gas prices”.

Consumer prices rose by 9.1 per cent year-on-year, the largest gain since 1981, data from the US Labour Department indicated on Wednesday. Prices rose by 1.3 per cent from May to June, after they had risen by 1 per cent from April to May.

“While today’s headline inflation reading is unacceptably high, it is also out of date,” a statement from Mr Biden said.

The core consumer price index, which strips out the more volatile food and energy components, advanced 0.7 per cent from the previous month and 5.9 per cent from a year ago, above forecasts.

The price increases reflect the growing effect of inflation on families as costs for necessities such as fuel and food rise faster than average incomes. Mr Biden said Wednesday's report did not reflect the savings Americans have made on declining fuel and wheat costs.

The inflation figures will mean Fed officials continue their aggressive interest-rate policy, and add further pressure on Mr Biden's administration to control prices before the midterm elections this year. The continuing surge in inflation has sparked a slump in the president's approval ratings.

“Tackling inflation is my top priority — we need to make more progress, more quickly, in getting price increases under control,” Mr Biden said.

He again urged Congress to pass legislation that would lower costs on prescription drugs, utilities and other necessities, and accused Republicans of proposing to raise taxes.

Forty per cent of adults believe tackling inflation should be a top priority this year, an AP-NORC poll last month found, up from 14 per cent in December.

While many economists have suggested the latest data will be the peak in the current inflationary cycle, several factors, such as housing, stand to keep price pressures elevated for longer. Geopolitical risks, including Covid lockdowns in China and Russia’s war in Ukraine, also pose risks to supply chains and the inflation outlook.

Relentless inflation has prompted Federal Reserve Chairman Jerome Powell and other central bank officials to engage in a series of rate increases in an attempt to slow rising prices. The Fed is expected to raise its short-term rate by three quarters of a point this month, with other rate increases likely to follow.

Mr Powell said last month there would have to be a “series of declining monthly inflation readings” before the Fed would ease its rate increases.

Agencies contributed to this report