American households faced nearly $500 in additional expenses in June due to the impact of decades-high inflation, according to an analysis based on Wednesday’s worse-than-expected Consumer Price Index data.
Moody’s Analytics senior economist Ryan Sweet crunched the numbers after federal data showed inflation jumped to 9.1% in June — outpacing economists’ expectations and matching rates of increase not seen since November 1981.
The average household coughed up an extra $493 last month, according to Sweet — who calculated the figure based on average US household spending in June compared to what would have been spent in 2018 and 2019, when inflation paced at 2.1%.
“The good news is that the increases in the CPI over the past few months won’t be duplicated in July,” Sweet told The Post. “Energy and other commodity prices have dropped noticeably in July and further drops are likely.”
Inflation has continually eroded the buying power of American consumers during its run-up in recent months, with everything from groceries to gas to rent becoming more expensive. Labor shortages, rising commodity prices and the Russia-Ukraine war are just a few factors contributing to the problem.
Food prices rose 10.4% in June compared to the same month one year earlier, while energy prices surged a whopping 41.6%. Shelter costs excluding energy services increased 5.5%.
Sweet noted that the wholesale price of gasoline — a leading indicator of where retail prices at the pump are headed — suggest a “significant decline” for the energy index in July’s CPI. Gas prices have steadily fallen over the last several weeks and are now well below the all-time high reached in mid-June.
High energy prices were a major reason why the June CPI was so elevated, contributing more than 3 percentage points of the 9.1% annualized increase.
Republicans and other critics assert that President Biden’s policies, including COVID-19 stimulus packages, have contributed to the inflation crisis. Detractors accuse his administration of failing to take necessary steps to bring prices lower, such as boosting domestic energy production.
Meanwhile, Biden and his team have laid the blame on Russian President Vladimir Putin — arguing his invasion of Ukraine has roiled supply chains and resulted in “Putin’s price hike” for American shoppers.
Stocks fell in trading Wednesday as investors priced in the increased likelihood that the Federal Reserve will hike its benchmark interest rate by as much as a full percentage point later this month in its latest bid to tame inflation.