U.S. inflation is estimated to have reached a new four-decade high in June, but there are signs of moderating price pressures. According to WSJ, the U.S. consumer-price index is expected to have increased 8.8% in June from the same month a year ago. That would be higher than May’s annual rate of 8.6%. However, fears of an economic slowdown have led to a decline in commodity prices in recent weeks, including oil, copper, wheat, and corn, after those prices rose sharply following the Russian invasion of Ukraine.
“There’s a pretty serious recession fear affecting a broad range of asset prices,” WSJ quotes Laura Rosner-Warburton, a senior economist at MacroPolicy Perspectives.
Economists said that core prices, a measure that strips out volatile food and energy components, are estimated to have increased by 5.7% in June from a year ago, a slower pace than May’s 6%. The month-to-month increase is estimated to have slowed slightly.
The U.S. Fed raised its interest-rate target by 0.75 percentage points in June, the largest increase since 1994. Slowing demand is key to restoring price stability but also elevates the risk of a recession. Fed Chairman Jerome Powell has said it needs clear evidence that price pressures are diminishing before slowing or suspending rate increases.
