Consumer prices have increased at an accelerating rate in the United States. The June reading is the fastest increase in inflation since November 1981. This increase was driven by higher prices for food and gasoline, but other factors also contributed to the increase. This increase is particularly troubling for lower-income Americans who are already paying a large portion of their income on necessities. The increase in prices may be a short-term peak, but economists are still hopeful that the price hikes will slow down in July and August.
The war in Ukraine has wrought enormous damage on the American economy and has especially hit Europe. Europe has become increasingly dependent on Russian oil, causing higher prices for gasoline, groceries, and other necessities. Last month, inflation in 19 countries hit historic highs. In the United Kingdom, it hit 9.1%. Although the record may be a bit higher, based on current trends it is not unusual for prices to increase by 10 percent or more.
As prices rise, pay rises should be matched by increases in wages and the cost of living. The UK’s inflation has surpassed the record we last saw in the 1970s – it reached 9.1 percent in the year ending in May. Food prices have also risen, and the war in Ukraine has affected the availability of corn, wheat, and sunflower oil. While the UK has benefited from a booming economy, the government is urging businesses not to spend too much on salary increases because of the potential for an “inflationary spiral”.