Photo: People cross a street near a gas station in Los Angeles, June 16, 2022. Many consumers have had to cut spending on non-essentials or stop filling up their tanks. (AP Photo/Jae C. Hong)
Inflation increased more than expected in June, up 9.1 percent compared to a year ago as rising prices continued to put pressure on consumers and slow down the economy, the Department of Labor reported on July 7.
The consumer price index (CPI) for June blew past the 8.8 percent Dow Jones estimate, marking another month of the fastest pace for inflation since December 1981. The CPI measures everyday goods and services related to the cost of living.
Energy contributed to nearly half of the increase, with the energy index rising 41.6 percent over the last year — the largest 12-month increase since April 1980, according to the Department of Labor. The gas index rose 11.2 percent and the food index increased 10.4 percent — the largest 12-month increase since February 1981.
Some of the largest contributors to inflation were the indexes for shelter, used cars and trucks, medical care, motor vehicle insurance, and new vehicles. Among the few major component indexes to decline in June were lodging away from home and airline fares.
As the Federal Reserve continues to institute aggressive interest rate increases, Black Americans remain the hardest hit by inflation.
Benchmark short-term borrowing costs are up by 1.5 percentage points and the central bank is expected to keep raising rates until inflation comes closer to its 2-percent target rate.
Economist Mohamed A. El-Erian commented on what he described as the “awful US inflation data,” tweeting that the “details appear equally worrisome.” The bottom line, he said, is a “further blow to economic and social well-being. Highlights Fed’s worst policy mistakes in decades”.
Black households are spending more of their post-tax income on necessities like food and energy, according to a Bank of America report cited by Business Insider.
On top of dealing with higher prices, Black people could see a spike in unemployment. Experts say inflation may reverse job gains seen by Black Americans since the pandemic.
A key measure tracked by economists showed that employment of Black Americans of “prime working age” — 25 to 54 — went up to 77.4 percent in April, the highest in 22 years. It’s still well below the equivalent measure for white Americans, but the increase has reduced the gap between the two figures to the narrowest on record, in data stretching back to 1994, Bloomberg reported.
As the U.S. fights inflation, the focus is being shifted from rebuilding the workforce to curbing price pressures through austerity measures. If employers start to cut jobs, experts say Black employees are at risk of losing work.
“We’re still going to be the last hired, so if you increase the unemployment rate, you just undo all the gains,” said William Spriggs, the Howard University economics professor and chief economist for the American Federation of Labor and Congress of Industrial Organizations, in a Bloomberg report. “What’s the point of the tight labor market? It is the necessary condition for Black advancement.”
There are signs that July inflation will show a decline, CNBC reported. Gas prices are down from their June peak, with a gallon of regular gas averaging $4.64, down 4.7 percent for the month, according to data from the Energy Information Administration.
The S&P GSCI commodities index, a broad-based measure of prices for multiple goods, is down 7.3 percent in July.
