Inflation hits another 40-year high. What does that mean for shoppers and the next Fed rate hike?
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Inflation jumped again in June on a persistent climb in gas, food and rent costs, notching another 40-year high and likely solidifying the Federal Reserve’s plans.
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Prices increased 9.1% from a year earlier, up from an annual rate of 8.6% the prior month and the largest gain since November 1981.
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Economists surveyed by Bloomberg had estimated inflation would rise to 8.8%.
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On a monthly basis, consumer prices increased 1.3%, the largest such leap since 2005, compared with a 1% rise in May.
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"Ouch," Ian Shepherdson, chief economist of Pantheon Macroeconomics, wrote in a research note of the latest surge in prices.
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Amid signs that inflation is poised to gradually ease, he, along with other economists, noted June likely marked its peak, though a similar pronouncement.
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The report bolsters the Federal Reserve's plans to raise its key interest rate by a hefty three-quarters of a percentage point for a second straight month as part of an campaign.
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The development disappointed already dour investors. After the latest figures were released, the Dow Jones Industrial Average sank by more than 300 points.
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The S&P 500 fell by 37 points, roughly 1%. And yields on 10-year notes popped. In midmorning trading, they hovered at 3.03%.
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