Inflation rose 5.4 percent during the 12-months leading up to June, a report from the Department of Labor indicated, marking the fastest spike in 13 years.
There was a 0.9 percent consumer price index (CPI) spike during the months of May and June, the report released Tuesday showed. Core inflation went from 3.8 percent to 4.5 percent. In response, The Dow Jones Industrial Average dropped 90 points — 0.26 percent — and the S&P 500 by 0.18 percent. The Nasdaq fell by 0.1 percent.
Used automobile sales contributed heavily to consumer prices increasing. In June, truck and used car sales surged 10.5 percent in June and a record 45.2 percent in the last 12 months. There is an increased demand for used vehicles because of the shortage of new ones. An international semiconductors shortage has been a major force behind the disruption in the supply chain.
As The Wall Street Journal noted, “Prices for used cars and trucks leapt 10.5%” accounting for “one-third of the rise in the overall index.” Gasoline and energy prices increased 45.1 percent and 24.5 percent, respectively, in the 12-months. A report last week from the American Automobile Association indicated gas prices increased 40 percent since Jan. 1, to an average price of $3.13 a gallon.
Inflation has been steadily rising after lockdowns, and the billions of federal government dollars injected into the economy. David Folkerts-Landau, Deutsche Bank’s chief economist, recently claimed inflation could result in a “significant recession” and is a “time bomb.”
“The effects could be devastating, particularly for the most vulnerable in society,” Folkerts-Landau said.
The White House has tried to downplay inflation, and a senior official reportedly said it will decrease in the “not-too-distant-future,” but did not clarify the exact timeline. President Joe Biden has proposed a $1.2 trillion infrastructure budget with partisan agendas that critics argue would harm the economic outlook.
“Joe Biden’s reckless spending has created an inflation crisis in America not seen since the 1970s, and it’s devastating for our families and small businesses. Under the Biden administration, inflation has grown every month,” said Republican Florida Sen. Rick Scott upon the last inflation report being published.