Inflation Report Updates: Chile Expects Inflation to Hit 11.1 Percent

Live Updates
  • Inflation in the United States has reached a 40-year high.
  • The consumer price index rose 9.1 percent in a year, according to the U.S. Bureau of Labor Statistics. This is the biggest yearly increase since the 8.6 percent jump in 1981.
  • This inflation rate is ahead of the Federal Reserve's annual two percent target for inflation and may lead the Fed to raise interest rates again later this month.
  • Republican lawmakers are blaming President Joe Biden, calling the latest economy report the "Biden Price Hike."
  • This comes as average gas prices have dropped to $4.63. While prices have fallen in recent weeks, they remain much higher than this time last year.
Gas Prices US
A woman pumps gas at a Sunoco mini-mart in Independence, Ohio, on Tuesday, July 12, 2022. Gene J. Puskar/AP Photo

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Chile Expects Inflation to Hit 11.1 Percent

Chile anticipates inflation will rise above 10 percent this year, a higher estimation than the country previously made in the wake of inflation surges around the world.

Chile is already facing higher inflation than it has since the mid-1990s. While economists in Chile previously projected in May that inflation would reach 8.9 percent, experts this week bumped that estimate up to 11.1 percent, according to Reuters.

The renewed estimate comes after the value of the Chilean peso dropped about 15 percent in recent weeks, the outlet reported.

Meanwhile, Chile's finance minister said in a presentation Reuters covered that the country's gross domestic product is expected to grow a bit more than initially anticipated. While delivering the presentation, the finance minister told officials there is expected to be a "greater weakness in consumption and demand" as 2022 continues.

Israel Had Biggest Growth in Inflation Over Two Years

Inflation is not just a U.S. issue; high prices are affecting countries around the world.

Pew Research Center compiled a list of the 44 countries with the highest and lowest inflation rates for the first quarter of 2022.

Turkey has the highest inflation rate at 54.8 percent.

In 37 of those nations, the inflation rate was at least double what it was in the first quarter of 2020, when the COVID-19 pandemic began.

The current inflation rate was four times higher than what it was two years ago in 16 countries.

Global Inflation
The inflation rates for the first quarter of 2022 in 44 countries. Pew Research Center/Pew Research analysis of OECD data

The inflation rate in the United States almost quadrupled in two years, averaging just below 8 percent in the first quarter of 2022.

Israel's inflation has grown faster in the past two years than any other nations of the Organization for Economic Cooperation and Development (OECD) and other economically significant countries.

The rate went from 0.13 percent in the first quarter of 2020 up to and average of 3.36 percent in the first quarter of this year.

Italy saw a nearly twentyfold increase in inflation rate from 2020 to 2022, from 0.29 percent to 5.6 percent. Switzerland went from -0.13 percent in the beginning of 2020 to 2.06 percent for the same time period this year.

China's inflation rate grew the least of countries studied.

Optimism Down Among Small Businesses

The National Federation of Independent Business (NFIB), an association of American small business owners, released a statement on Wednesday commenting on the "staggering" inflation rate most recently reported by the U.S. Bureau of Labor Statistics.

Inflation, which hit a 40-year high in June at 9.1 percent, "remains the top problem for the small business economy," NFIB Vice President of Federal Government Relations Kevin Kuhlman said. He added that there "seems to be no end in sight."

Optimism among small business owners has dropped for the last six months in a row, Kuhlman said, and "expectations for better business conditions are at an all-time low."

"Congress must not increase the pain and uncertainty that Main Street is feeling by proposing a new tax on small businesses that would raise costs and threaten jobs," Kuhlman added. The NFIB last week released a separate statement discouraging proposed tax increases on small businesses, which the association described at the time as "a direct attack on Main Street."

"We urge Congress to act against inflation and reject any tax increases on small businesses," Kuhlman's Wednesday statement concluded.

Bank of America Predicts a 'Mild Recession' This Year

Bank of America economists predict a "mild recession" will come this year in the United States.

"A number of forces have coincided to slow economic momentum more rapidly than we previously expected," analysts said in a report Wednesday.

Rising inflation increasing food and gas prices leave American households will a smaller budget for discretionary purchases.

Michael Gapen, a Bank of America economists, told CNN that momentum in the domestic economy "clearly appears to be slowing."

"The inflation tax is taking out the ability of households to spend on discretionary items at a fast clip," he told the outlet.

Bank of America expects U.S. gross domestic product (GDP) to decline 1.4 percent from last year and then increase 1 percent in 2023. This would raise the unemployment rate by 1 percentage point to about 4.6 percent.

In order to meet the Federal Reserve's two percent inflation target, a recession is needed, Bank of America said in a note Friday.

Wells Fargo Investment Institute and Nomura Holdings Inc. have also forecasted a recession this year. Economists at Deutsche Bank AG believe the recission will start in mid-2023.

Goldman Sachs is a little more optimistic. The investment banking firm said there is a 30 percent chance of a recession over the next year but it rises to a nearly 50 percent chance over the next two years.

Rising Costs to Impact Women More Than Men

The increase in the cost of living is likely to hit women the hardest, the World Economic forum reported.

"The projected deepening of the current cost-of-living crisis is also likely to impact women more severely than men, as women continue to earn and accumulate wealth at lower levels," the WEF said in its July Global Gender Gap Report.

Saadia Zahidi, managing director at the forum, told the Associated Press that woman have been disproportionately affected by the "cost-of-living crisis" following high food prices, labor market losses during the pandemic and insufficient "care infrastructure."

"In face of a weak recovery, government and business must make two sets of efforts: targeted policies to support women's return to the workforce and women's talent development in the industries of the future," she said. "Otherwise, we risk eroding the gains of the last decades permanently and losing out on the future economic returns of diversity."

The Geneva-based think tank also estimates that it will take 132 years for the world to reach gender parity, based on salaries, economic opportunity, education, health and political empowerment.

Interest Rate Climbs in Canada

The Bank of Canada on Wednesday raised its policy interest rate to 2.5 percent, an uptick of 100 basis points.

The country's central bank attributed the rate increase to inflation, which it said has been "higher and more persistent" in Canada than the bank anticipated. Inflation is up around the world, with Canada's neighbors in the U.S. reporting a 40-year high inflation rate of 9.1 percent for the last 12 months.

Canada's interest rate hike is the largest the bank has implemented at once in more than two decades, but marks the fourth time a rate increase has occurred since March, the Canadian Broadcasting Corporation reported.

The bank said it anticipates inflation "will likely remain around 8% in the next few months" but said its July projections indicate inflation could begin declining later this year before dropping to about 3 percent by the end of 2023.

The bank said interest rates will need to increase again, with the pace of future increases to be "guided by the Bank's ongoing assessment of the economy and inflation."

The bank quoted its governor, Tiff Macklem, in a Wednesday tweet addressing the rate increase.

"By front-loading interest rate increases now, we are trying to avoid the need for even higher interest rates down the road," Macklem said.

Trump Says U.S. Is 'So Weak Right Now'

Former President Donald Trump said the U.S. is "so weak right now" in a statement that focused on the latest inflation numbers released Wednesday by the U.S. Bureau of Labor Statistics.

The bureau's Wednesday consumer price index report said inflation reached 9.1 percent over the last 12 months, a 40-year high.

The updated inflation rate "is terrible for our Country," the former President's statement distributed by his Save America PAC said. He went on to mention the rising prices of fuel, airfare and eggs before questioning how people and businesses can "survive this."

Trump's statement then shifted to the "radical left Democrats," individuals he said are focused on trying to "get Trump."

"Our country is so weak right now because the radical left Democrats have no clue what they are doing," he said. "All they want to do is 'get Trump,' and they are willing to destroy our nation to do it."

"America will not allow this to go on for much longer," Trump added. He concluded his statement with a call to voters ahead of this fall's midterm elections. "Don't vote for the radical left Democrats, vote for America First Republicans—Save America!"

Inflation Surpasses 10% in Several U.S. Cities

While the national inflation rate has increased to 9.1 percent in June, several major cities are experiencing double-digit inflation rates.

Eight U.S. cities have inflation rates above 10 percent, up from four cities last month.

Seattle, Miami, Houston and Baltimore are all registering inflation in double-digits for the first time.

Atlanta, Phoenix, Tampa and the metropolitan area of Riverside-San Bernardino also have inflation above 10 percent.

Urban Alaska has the highest inflation at 12.4 percent. The highest in mainland United States is Phoenix, with 12.3 percent. For all cities, these are the highest figures available data from the U.S. Bureau of Labor Statistics (BLS), which goes back to 2002.

Inflation for some urban areas is not available, making it difficult to track the biggest increases across the country.

Chicago has seen one of the highest increases, whether viewed over one or two months, going from 7.2 percent in April and 8 percent in May to 9.4 percent in June.

U.S. Inflation Over 9 Percent
U.S. Inflation Over 9 Percent Statista

This Statista chart shows the year-on-year change in the Consumer Price Index for all urban consumers in the U.S.

Average Monthly Rent Above $2,000 in June

The average monthly rent in the U.S. was above $2,000 in June, according to a rental report released Monday by Redfin.

The real estate company identified $2,016 as the average monthly cost for rent last month. The average monthly cost of rent reached past $2,000 for the first time in May, Redfin's rental report for that month said.

The company's latest report was released two days before the U.S. Bureau of Labor Statistics released its consumer price index report for June. The bureau identified the cost of shelter as a significant contributor to rising inflation, with the shelter index experiencing a 5.6 percent increase over the last 12 months.

Though rent increases have been on the rise, Redfin's report said that surge is beginning to slow. Asking rent prices increased 0.7 percent between May and June, and the national average asking cost of rent was up 14 percent compared with this time last year, which the report noted was "the smallest annual increase since October" of 2021.

Daryl Fairweather, the company's chief economist, attributed the slowing increases in rent to the strain inflation is placing on American consumers.

"With the cost of gas, food and other products soaring, renters have less money to spend on housing," Fairweather was quoted as saying in the report. While he said the easing of rent increases is "likely to continue," he noted some cities—including New York, Seattle, San Antonio and Austin, Texas—still have rent costs rising "at unprecedented rates."

Cincinnati has experienced the largest increase in rent in the last 12 months, with an asking rent increase of 39 percent compared with this time last year. Only three major metro areas have seen rent prices fall in the last year: Milwaukee, Minneapolis and Kansas City, Missouri.

Rent increases expected to slow
A "For Rent" sign is posted near a home on February 7, 2022 in Houston, Texas. Brandon Bell/Getty Images

Fed Anticipates Another Interest Rate Hike

Amid the stunning report on rising inflation in the U.S., the Federal Reserve will likely announce another inflation rate increase.

The Fed is expected to raise its key short-term rate at a meeting later this month by another three-quarters of a percentage point.

Last month, The Fed increased the federal interest rate three quarters of a percentage point to a range of 1.5 percent to 1.75 percent.

During a June meeting, the Federal Open Market Committee and the Board of Governors of the Fed said that they would likely raise its benchmark interest rate by at least 75 basis points at both the June and July meetings after the release of the "higher-than-expected inflation data."

Current inflation is "well above" the Fed's inflation objective.

The Fed said in June that a return of inflation to the two percent objective was "necessary for creating conditions conducive to a sustainably strong labor market over time."

Food, Energy Prices Jumped the Most

The U.S. Bureau of Labor Statistics identified food and energy prices as two of the biggest contributors to inflation in its report on the June 2022 Consumer Price Index, though it noted shelter-related costs also helped drive up costs for American consumers.

In the last month, the energy index increased by 7.5 percent, bringing the sector's total increase over the last 12 months to a 41.6 percent increase. Gas has largely driven those prices up, with a 59.9 percent increase over the last 12 months. That gas index increase is "the largest 12-month increase in that index since March 1980," the report noted. The bureau said the electricity index has also seen its largest 12-month increase since 2006.

The rising energy index "contributed nearly half of the all items increase," the report added.

Meanwhile, the food index has experienced a 10.4 percent increase over the last 12 months, with a 1.0 percent gain in June. There have been "sharp increases" in the prices of butter and sugar, and the flour index in June increased by 5.3 percent. The report also acknowledged increases in the prices of cereal, bakery items and dairy.

"The only major grocery group index to decline in June was the index for meats, poultry, fish, and eggs which fell 0.4 percent over the month as the indexes for beef and pork declined," the report said.

Aside from food and energy, the bureau said all other items when calculated together had a 12-month index increase of 5.9 percent, with the index for shelter increasing 5.6 percent during that time period. The report identified the "largest contributors" to those increases in June as "shelter, used cars and trucks, medical care, motor vehicle insurance, and new vehicles." New vehicles in particular have seen an 11.4 percent index increase over the last 12 months, according to the report.

Average Gas Price Remains Above $5 in Nine States

The national average price of gas continues to drop this week to $4.63

This is down from $4.78 a week ago and $5.01 a month ago. The current price is well above the average price of $3.15 last year.

Prices at the pump still remain high in some states.

The average price for regular gas remains above $5 in nine states, with the average price in California at $6.03.

National Average Gas Prices
The national average price of gas has dropped Wednesday. Prices in some states remain above $5. AAA

These states have the highest average gas prices:

California

  • Regular: $6.03
  • Mid-Grade: $6.26
  • Premium: $6.39

Hawaii

  • Regular: $5.61
  • Mid-Grade: $5.82
  • Premium: $6.05

Alaska

  • Regular: $5.44
  • Mid-Grade: $5.62
  • Premium: $5.85

Nevada

  • Regular: $5.36
  • Mid-Grade: $5.611
  • Premium: $5.80

Illinois

  • Regular: $5.12
  • Mid-Grade: $5.60
  • Premium: $5.98

Oregon

  • Regular: $5.35
  • Mid-Grade: $5.58
  • Premium: $5.781

These states have the lowest average gas prices:

Georgia

  • Regular: $4.14
  • Mid-Grade: $4.56
  • Premium: $4.92

South Carolina

  • Regular: $4.14
  • Mid-Grade: $4.54
  • Premium: $4.88

Mississippi

  • Regular: $4.15
  • Mid-Grade: $4.52
  • Premium: $4.87

Texas

  • Regular: $4.18
  • Mid-Grade: $4.57
  • Premium: $4.89

Louisiana

  • Regular: $4.19
  • Mid-Grade: $4.58
  • Premium: $4.91

Arkansas

  • Regular: $4.23
  • Mid-Grade: $4.58
  • Premium: $4.92

Biden Calls Inflation Report 'Out-of-Date'

President Joe Biden reacted to the "unacceptably high" inflation report Wednesday, insisting the report is "out-of-date."

In a statement, Biden said the data from today's report "does not reflect the full impact of nearly 30 days of decreases in gas prices." He said the price at the pump has decreased by about 40 cents since mid-June.

He said other commodities, like wheat, have "fallen sharply" since the report.

"Today's report shows that what economists call annual 'core inflation' came down for the third month in a row, and is the first month since last year where the annual 'core' inflation rate is below six percent," Biden said.

He added that inflation is the world's "most pressing economic challenge," reiterating that the COVID-19 pandemic and Russian President Vladimir Putin's war in Ukraine are to blame for soaring prices.

"It is little comfort to Americans to know that inflation is also high in Europe, and higher in many countries there than in America," Biden said.

Tackling inflation is Biden's "top priority."

In order to help ease the strain on Americans' wallets, Biden said he will:

  • Continue to do everything he can to bring down the price of gas by dipping into strategic petroleum reserves, working with European allies to put a price cap on Russian oil and insist oil and gas companies lower prices at the pump.
  • Urge Congress to pass legislation to reduce everyday costs.
  • Oppose Republican efforts to raise taxes on working people or cut Social Security and Medicare.
  • "Give the Federal Reserve the room it needs to help it combat inflation."

Inflation Rate Soars to 40-Year High

Inflation has increased 9.1 percent since last year, according to a new report from the U.S. Bureau of Labor Statistics (BLS). This is the biggest yearly increase in 40 years.

That represents "the largest 12-month increase since the period ending November 1981," according to BLS.

In May, the annualized rate of inflation was 8.6 percent, which BLS said represented "the largest 12-month increase since the period ending December 1981," while the annualized rate had been 8.3 percent in April.

A steep rise in inflation means decade-high price jumps for consumers.

In one year, grocery prices have increased 12.2 percent, the biggest increase since 1979. Rents have risen 5.8 percent, the most since 1986. Housing costs have also increased, as a shortage in houses for sale keep prices and mortgage rates high.

New car prices have also increased 11.4 percent in a year. While the daily national average gas price has fallen from a $5 peak in recent weeks, the price at the pump still remains higher that a year ago.

Inflation remains top of mind for Americans ahead of mid-term elections. A June AP-NORC poll found that 40 percent of adults think inflation should be a priority for the government this year. This is up from 14 percent in December.