One day after the Consumer Price Index (CPI) data showed that inflation was worse than expected in June, Treasury Secretary Janet Yellen said that “inflation in the United States remains unacceptably high and it’s our administration’s top economic priority to bring it down.”
Speaking in Bali, Indonesia, ahead of the Group of 20 finance ministers’ meeting, Yellen added that the greatest challenge today comes from Russia’s war against Ukraine, which is triggering “negative spillover effects from that war in every corner of the world – particularly with respect to higher energy prices and rising food insecurity,” according to a transcript of her speech.
“That was reflected in yesterday’s CPI data, which showed almost half of the increase coming from higher energy prices,” she said.
Indeed, inflation not only continued to rise in June, but data was even worse than expected. The Bureau of Labor Statistics (BLS) released its CPI on July 13, and the all-items index increased 9.1% for the 12 months ending June, a new four-decade high. The increase was broad-based, with the indexes for gasoline, shelter and food being the largest contributors.
The energy index rose 7.5% over the month and contributed nearly half of the all items increase, with the gasoline index rising 11.2% after increasing 4.1% in May. The index for natural gas rose 8.2% in June, the largest monthly increase since October 2005. The energy index rose 41.6% over the past year, while the gasoline index increased a staggering 59.9%, representing the largest 12-month increase in that index since March 1980. The index for electricity rose 13.7% the largest 12-month increase since the period ending April 2006, while the index for natural gas increased 38.4% over the last 12 months, the largest such increase since the period ending October 2005.
Yellen added that the administration is supportive of the Federal Reserve’s efforts to get inflation under control.
“And beyond that, we’re taking our own steps that we believe will be supportive in the short term to get inflation down, particularly what we’re doing on energy prices, the Strategic Petroleum Reserve. Also, the work that we’re doing to institute a price cap on Russian oil to avoid potential future spikes in oil prices,” she said.