Inflation in the United States hit a 40-year high of 8.6% in May, according to data released by the Bureau of Labor Statistics on Tuesday. The Consumer Price Index, which measures the cost of a basket of goods and services, rose 1.0% from April to May, and 8.6% from May 2021.

The increase in inflation was driven by rising prices for food, energy, and shelter. Food prices rose 1.0% in May, and are up 10.1% from a year ago. Energy prices rose 3.9% in May, and are up 34.6% from a
year ago. Shelter prices rose 0.6% in May, and are up 5.5% from a year ago.

The Federal Reserve is expected to raise interest rates by 0.75 percentage points at its meeting on Wednesday to combat inflation. However, economists are divided on whether the Fed
will be able to bring inflation under control without causing a recession.

The high inflation rate is putting a strain on household budgets and is contributing to a decline in consumer confidence. A recent survey by the Conference Board found that consumer confidence fell to
its lowest level in 16 months in June.

The high inflation rate is also hurting the stock market. The S&P 500 index is down about 19%year-to-date.

The Federal Reserve is facing a difficult challenge in trying to bring inflation under control without causing a recession. The Fed hopes that raising interest rates can slow the economy enough to get inflation down without causing a sharp decline in economic activity. However, there is no guarantee that the Fed will be able to achieve this delicate balance.

The high inflation rate is a significant concern for policymakers and businesses alike. It remains to be seen how the Fed will be able to bring inflation under control without causing a recession.

 


By: Md. Aamir Aman

The Director of Ruzhn English Language Center Bugh

Meeri Turbat