The consumer price index released by the Bureau of Labor Statistics on Wednesday accelerated further last month, beating economists’ estimates of an 8.8 percent increase. It marked the fastest year-over-year increase since November 1981. Prices rose 1.3 percent month-on-month in June, after rising 1 percent in May. Stripping out volatile items such as food and energy, core inflation rose 0.7 percent, compared with a 0.6 percent rise in May. That translated to an annual increase of 5.9 percent, roughly in line with the 6 percent pace reported the previous month.

				You are viewing a snapshot of an interactive graphic.  This is probably because you are offline or JavaScript is disabled in your browser.

The data will boost the U.S. central bank’s efforts to restore price stability, which intensified dramatically last month after officials abandoned earlier plans to raise interest rates by half a point and implemented the first 0.75 percentage point increase since in 1994. Policymakers have also signaled their intention to raise interest rates to a level — estimated to be around 3.5% — that begins to dampen economic activity by the end of the year. They seek to maintain an aggressive approach to tightening monetary policy until there are signs that monthly inflation readings are slowing to a pace more consistent with the Fed’s 2 percent target. Bond yields jumped after the inflation report, with the yield on the two-year note, which moves in line with interest rate expectations, hitting its highest level since late June. It stabilized at 3.2%. After the report, futures were pricing in about a 30% chance of a 1 percentage point gain in July. However, the consensus remains that the Fed will raise interest rates by 0.75 percentage points, the same size increase as in June. The monthly inflation gains were “broad-based,” according to the BLS, but a 7.5 percent increase in the energy index accounted for nearly half of the jump in headline inflation. Gasoline prices alone rose 11.2 percent in June, while food prices rose 1 percent. Prices for new and used vehicles continued to rise, rising 0.7 percent and 1.6 percent, respectively. In a worrying sign, inflation in services excluding energy rose 0.7 percent month-on-month and rose 5.5 percent year-on-year. Shelter-related costs drove a significant portion of the increase, rising 0.6 percent for the month or 5.6 percent year-over-year. This is the largest annual increase since February 1991. Prices for transportation services and medical care also rose. An outlier was airline fares, which fell 1.6 percent after two months of double-digit growth.

The Biden administration, whose popularity has plummeted amid rising inflation, this week sought to beat June’s high rate and downplayed the acceleration, stressing that the data covered a period before energy prices plummeted and of other goods. Brent crude, the international oil benchmark that had climbed to nearly $140 a barrel in early March after Russia’s invasion of Ukraine, has this month fallen below $100 a barrel. Global food prices have also moderated from historic highs.

				You are viewing a snapshot of an interactive graphic.  This is probably because you are offline or JavaScript is disabled in your browser.

On Tuesday afternoon, a fake version of the June report hit the Internet that said prices had risen at an annual rate of 10.2 percent, prompting the Bureau of Labor Statistics to publicly discredit it. Should the Fed raise rates by another three-quarters of a percentage point at its July meeting, as expected, the target range for the federal funds rate would widen to 2.25 percent to 2.50 percent. Alongside these actions, which include shrinking its balance sheet to $9 trillion, the Fed has stepped up its rhetoric not only about its “unconditional” commitment to reducing inflation, but also about what it is willing to risk in terms of it is about economic recovery to do so. While labor demand remained remarkably strong, with another 372,000 jobs created last month alone, economists fear the momentum will soon moderate as the U.S. economy heads into recession sometime next year. The Fed has already begun to acknowledge that unemployment should rise, with officials most recently projecting that unemployment will rise from the current historic low of 3.6% to just over 4% by the end of 2024 . Many economists believe a more accurate estimate is around 5 percent, which translates into significantly more job losses. Additional reporting by Kate Duguid in New York