Why is US inflation soaring, and will prices cool anytime soon?

by | Jul 25, 2022 | World

Millions of Americans are living on the edge amid historically high inflation at the grocery store and petrol pump, but economists Al Jazeera spoke with say there is reason for hope – even if the trend is still moving in the wrong direction.The consumer price index (CPI), a gauge of inflation, jumped 9.1 percent in June from a year earlier – the largest gain since 1981. All eyes are now on the Federal Reserve as it meets on Tuesday to discuss monetary policy: Can the United States’s central bank raise interest rates and increase the cost of capital in order to reduce demand, boost supply, and moderate prices without plunging the economy into a deep recession?
“We are really in uncharted territory,” Brent Meyer, policy adviser and economist at Atlanta’s Federal Reserve, told Al Jazeera. “The size of the shocks that have buffeted the economy and the speed and suddenness with which things have changed has put us in a place where it’s very challenging from a monetary policy standpoint.”
Following its meeting next week, the Fed is expected to raise interest rates by three-quarters of a point. But will it be enough to ease price pressures?
According to a recent Pew Research Center survey, three-quarters of Americans say they are “very concerned” about the rising prices. The cost of energy has jumped 41.6 percent in the last year while groceries increased by 12. …

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