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Inflation in America broke the record of 41 years, what will be its effect on the world?

Inflation in America has touched a record level, defying the estimates of economists. In June 2022, the inflation rate in America has reached 9.1 percent. This is the highest level in the last 41 years. For the first time since 1981, the rate of inflation has been so high in any month. The US central bank, the Federal Reserve, has so far failed to contain inflation in the country.

The US Labor Department has released inflation data on Wednesday, July 13. The Labor Department said that the Consumer Price Index has increased by 9.1 percent in June compared to the previous year. At the same time, there has been an increase of 1.3 percent in comparison to the last month i.e. May. This is the highest increase since 2005 on a monthly basis. The main reason for increasing inflation in America is the huge increase in the prices of petrol, house rent and food items.

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Economists’ estimates were put on hold

According to a report by Moneycontrol, economists had projected inflation to rise by 1.1 percent on a monthly basis and 8.8 percent on an annual basis in the month of May. However, their estimates did not come true and the latest figures are much higher than the estimates of these economists.

Monetary policy may be strict

Due to rising inflation, the pressure on the US Federal Reserve Bank to tighten its monetary policy has increased. Now experts are speculating that the Federal Reserve may increase interest rates again at the end of this month. Raising interest rates by central banks reduces liquidity in the market and helps in curbing inflation.

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