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Inflation in the United States rose again and complicates the economic recovery: accumulates 5.4% in one year

According to Wednesday’s report from the U.S. Department of Labor, consumer prices rose by 0.5% from June to July, below the previous monthly increase of 0.9%. Compared to the previous year, inflation accumulates an increase of 5.4%.

While prices continue to climb, the pace since February appears to have slowed, a sign that Americans could get some relief after four months of strong increases They have imposed a financial burden on the country’s households.

Excluding volatile oil and gas prices, so-called core inflation rose 4.3% in the past year, down from 4.5% in June.

Rising inflation has become the Achilles heel of economic recovery, since it reduces a large part of the workers’ benefits due to the increase in wages, at the same time that increase the pressure on Federal Reserve policy makers under Chairman Jerome Powell, who faces the requirement to keep prices stable.

Inflation also threatens to become a political drag on President Joe Biden, whom Republicans in Congress have blamed for contribute to the acceleration of inflation for pushing through a $ 1.9 trillion financial aid package last spring that included stimulus checks for most households and supplemental federal aid.

Another trillion of spending, backed by Biden and Congressional Democrats, is about to be approved by Congress in the coming weeks.

In response, Powell and the White House have said that they believe the spike in inflation, which far exceeds the Federal Reserve’s 2% annual target, it will be temporal because it is mainly due to supply shortages resulting from the sudden closure – and rapid reopening – of a $ 20 trillion economy.

Most economists agree that the main drivers of price increases are goods and services most affected by the pandemicFrom new and used vehicles to hotel rooms, airline tickets and building materials.

But other inflationary trends could last longer. Rents, for example, are on the rise again in many large cities after falling during the pandemic.

House prices have skyrocketed. And workers, especially in the restaurant and retail sectors, are receiving significant wage increases as companies struggle to fill jobs.

Some companies continue raising prices to compensate for increased costs of parts and labor.

The hamburger chain Shake Shack plans to raise its prices between 3% and 3.5% in the last three months of the year, its executives said in a conference call with investors.

Unilever, the maker of Dove soap and Ben and Jerry’s ice cream, has said it will raise some prices to offset higher raw material costs.

And Yum Brands, which owns KFC and Taco Bell, said late last month that its franchises have applied “moderate” price increases.

Source: AP

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