U.S. consumer prices surged 9.1% in June, the largest annual increase in more than four decades amid stubbornly high costs for gasoline, food and rent, cementing the case for another 75-basis-point interest rate hike by the Federal Reserve this month, Reuters reported. The larger-than-expected increase in the year-on-year consumer price index reported by the Labor Department on Wednesday also reflected higher prices for healthcare, motor vehicles, apparel as well as household furniture. The CPI increased by the most in nearly 17 years on a monthly basis. The inflation data followed on the heels of stronger-than-expected job growth in June and suggested that the Fed's aggressive monetary policy stance had made little progress so far in cooling domestic demand and bringing inflation down to its 2% target. Though a global problem, high inflation is a political risk for U.S. President Joe Biden and his Democratic Party heading into congressional elections in November. "Despite the Fed's best intentions, the economy looks to be moving into a higher inflation regime," said Christopher Rupkey, chief economist at FWDBONDS in New York. "The Fed is even further behind the curve after today's sizzling report." The consumer price index increased 1.3% last month, the biggest monthly gain since September 2005, after advancing 1.0% in May. A 7.5% surge in energy prices accounted for nearly half of the increase in the CPI. Gasoline prices jumped 11.2% after rebounding by 4.1% in May. Natural gas prices rose 8.2%, the most since October 2005, while the cost of electricity increased 1.7%. Food prices gained 1.0%. The cost of food consumed at home rose 1.0%, posting the sixth straight monthly increase of at least 1.0%.
