U.S. inflation rate reaches a four-decade high of 8.6%
Annual inflation in the United States has touched a new four-decade high of 8.6 percent, according to the latest consumer price index statistics.
Inflation in the United States rose to a four-decade high of 8.6 percent in May, above experts’ predictions. The annual inflation rate in the United States has now reached 8.6 percent, a 41-year high, according to the most recent statistics released today by the U.S. Bureau of Labor Statistics. The study from the Bureau of Labor Statistics reveals that prices have risen across the board, with housing, fuel, and food contributing the most. In May, the shelter index increased by 0.6 percent, the largest monthly gain since March 2004. After a brief dip in April, the energy and gasoline indices both increased by 3.9% and 4.1%, respectively.
As a result of March’s transitory drop of 20 basis points in inflation, many analysts now think that inflation has already peaked and that quantitative easing by the Federal Reserve will continue to bring it down in the months to come. A Wall Street Journal poll found that experts expected the CPI to rise by 8.3 percent in May, which is a major underestimate of 30 basis points.
A dismal future for risky assets like stocks and cryptocurrencies may be in store if inflation remains high despite the Federal Reserve’s attempts to gradually increase interest rates and reduce its balance sheet. In order to achieve its 2% inflation objective, the Fed may need to increase interest rates by more than 50 basis points at a time or accelerate the unwinding of its balance sheet. As a result of this, consumer demand for products and services would be curtailed and businesses’ bottom lines would be negatively impacted as a result.
The Nasdaq-100 and S&P 500 indexes fell 2.92 percent and 2.58 percent, respectively, on the opening of the U.S. market in response to the news. The two major currencies, Bitcoin and Ethereum, have both lost 2.6 percent and 3.7 percent of their value, respectively, in the cryptocurrency market. An additional 9 percent or more was lost by the smaller cryptocurrencies such as Aave (AAVE), Chainlink (CHAIN), and Cardano (CARD).