Javascript is not enabled.

Javascript must be enabled to use this site. Please enable Javascript in your browser and try again.

Skip to content
Content starts here
CLOSE ×
Search
Leaving AARP.org Website

You are now leaving AARP.org and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

Inflation Surges in June

Food, energy, rent lead the rise; highest yearly increase since 1981

Gasoline prices are displayed at a gas station in Vernon Hills, Ill., Friday, April 1, 2022.  Inflation soared over the past year at its fastest pace in more than 40 years, with costs for food, gasoline, housing and other necessities squeezing American consumers and wiping out the pay raises that many people have received.  (AP Photo/Nam Y. Huh)
AP Photo/Nam Y. Huh

U.S. inflation surged to a new four-decade high in June because of rising prices for gas, food and rent, squeezing household budgets and pressuring the Federal Reserve to increase interest rates aggressively — trends that raise the risk of a recession.​

The government’s consumer price index soared 9.1 percent over the past year, the biggest yearly increase since 1981, with nearly half of the increase due to higher energy costs.​

​Lower-income and Black and Hispanic Americans have been hit especially hard, since a disproportionate share of their income goes toward essentials such as transportation, housing and food. But with the cost of many goods and services rising faster than average incomes, most Americans are feeling the pinch in their daily routines.​

​For 72-year-old Marcia Freeman, who is retired and lives off a pension, there is no escape from rising expenses.​

member card

AARP Membership — $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

Join Now

​“Everything goes up, including cheaper items like store brands,” said Freeman, who visited a food bank near Atlanta this week to try to gain control of her grocery costs. Grocery prices have jumped 12 percent in the past year, the steepest climb since 1979.​

Tough problem for the Federal Reserve to fix

​Accelerating inflation is a vexing problem for the Federal Reserve, too. The Fed is already engaged in the fastest series of interest rate hikes in three decades, which it hopes will cool inflation by tamping down borrowing and spending by consumers and businesses.​

membership-card-w-shadow-192x134

AARP Membership — $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

​The U.S. economy shrank in the first three months of the year, and many analysts think the trend continued in the second quarter.​

​“The Fed’s rate hikes are doing what they are supposed to do, which is kill off demand,” said Megan Greene, global chief economist at the Kroll Institute. “The trick is if they kill off too much and we get a recession.”

The central bank is expected to raise its key short-term rate this month by a hefty three-quarters of a point, as it did last month.​

Companies can’t keep up with demand

Shopping & Groceries

Freshly

20% off a Freshly meal delivery subscription

See more Shopping & Groceries offers >

After years of low prices, a swift rebound from the 2020 pandemic recession — combined with supply-chain snags — ignited inflation.​

​Consumers unleashed a wave of pent-up spending, spurred by vast federal aid, ultra-low borrowing costs and savings they had built up while hunkering down. As homebound Americans spent heavily on furniture, appliances and exercise equipment, factories and shipping companies struggled to keep up.​

​In recent months, as COVID fears have receded, consumer spending has gradually shifted away from goods and toward services. Yet rather than pulling down inflation by reducing goods prices, the cost of furniture, cars and other items has kept rising, while restaurant costs, rents and other services are also getting more expensive.​

membership-card-w-shadow-192x134

AARP Membership — $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

​The year-over-year leap in consumer prices last month followed an 8.6 percent annual jump in May. From May to June, prices rose 1.3 percent, following a 1 percent increase from April to May.​

​Some economists say they think inflation might be reaching a short-term peak. Gas prices, for example, have fallen from the eye-watering $5 a gallon reached in mid-June to an average of $4.52 nationwide July 18 — still far higher than a year ago.

membership-card-w-shadow-192x134

AARP Membership — $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.