Those who hoped the worst was over will have to wait. Inflation in the United States reached 9.1% over one year in June, a record since November 1981. This figure, worse than expected, marks a clear deterioration compared to the previous month, when the general increase had reached 8 .6%.
Month-on-month, the trend is accelerating, with prices rising 1.3% in June, compared to 1% in May and 0.3% in April, according to data released on Wednesday (July 13th) by the US Department of Labor. This bad figure should force the US Federal Reserve (Fed) to raise its key rates again at its meeting at the end of July, by 0.75 points or even one point if we are to believe market expectations. . Short-term rates are currently pegged between 1.5 and 1.75, down from just above zero in March.
The boom in inflation is explained by the very sharp rise in energy prices (7.5% over one month, 41.6% over one year), but also food (1% over one month , 10.4% over one year). However, prices excluding energy and food, which constitute core inflation, continued to accelerate, with an increase of 0.7 points against 0.6 in the previous months. Over one year, this core inflation fell slightly, since it reached 5.9% after having peaked at 6.5% in March, a trend welcomed by President Joe Biden. The exegesis of the figures does not bring anything reassuring, except for a slight drop in the price of plane tickets, which can be seen on the ground.
No inflation-wage spiral
The only positive news remains the evolution of weekly wages, which increased by only 4.2% over one year, against a peak of 4.6% in April. Americans are losing purchasing power, with a real decline of 4.4% in weekly wages, but the advantage of this situation is that there is still no inflation-wage spiral. The labor market remains excellent, with 372,000 job creations in June, a higher rate than expected and an unemployment rate of 3.6% at its lowest.
In this context, observers consider it unlikely that the United States will be in recession. This good health of the economy, despite the announcements of the tech on the slowdown in hiring, complicates the task of the Fed. The cooling of the economy will not come by itself and the Fed risks causing a decline in economic activity itself.
After the publication of the inflation figure, ten-year interest rates rose briefly but returned to around 2.9%, their previous level, just like Wall Street, which fell before recovering. At midday, the S&P 500 was down slightly by 0.2%, while the Nasdaq was even slightly in the green. The dollar, which serves as a safe haven, in particular because of the rise in the cost of money, remains just below parity with the euro. The calm of the market does not exclude any tumult in the coming days, as the volatility of the last few months has shown. The major American banks will kick off the results season by presenting their second quarter results on Thursday July 14 and Friday July 15.
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