US inflation rises to record level – concern about the euro grows

Created: 07/13/2022 15:27

By: Lisa Mayerhofer

Inflation in the US has reached new record highs.

(Iconic image) © Arno Burgi/dpa-Zentralbild/dpa

The inflation rate in the US rose faster than feared in June.

Concerns are now also growing in the euro zone.

Washington - Inflation in the US hit new record highs in June: With an inflation rate of 9.1 percent compared to the previous year, the United States recorded the strongest increase since the end of 1981. This is reported by the US business magazine

, citing data from the US -Department of Labour.

US inflation: Economists surprised by increase

Compared to the previous month, the inflation index rose by 1.3 percent - the strongest since 2005.

According to

, this is due to higher costs for gas, housing and groceries.

Economists were surprised by the strength of the price hike.

Although they had expected the inflation rate to rise, they had only assumed an average of 8.8 percent.

In May, inflation was 8.6 percent.

The US dollar and capital market interest rates in the US rose as an initial reaction.

This suggests that the financial markets are expecting further and significant interest rate hikes by the US Federal Reserve.

The Fed recently raised interest rates by 0.75 percentage points.

At the next interest rate meeting at the end of the month, another large rate hike is expected.

US inflation: Euro under pressure

This in turn can put pressure on the European Central Bank (ECB) in Frankfurt to react more strongly to inflation rates in the euro area.

The ECB does not intend to start raising interest rates until July and is therefore acting much more cautiously than other central banks.

Meanwhile, the euro continued to fall after reaching parity with the dollar.

On Wednesday, the European common currency traded briefly at $ 0.9998 in London.

On Tuesday, the euro fell to the dollar level for the first time since 2002.

The reason for the collapse of the common currency are the poor economic prospects for the euro zone due to the consequences of the Ukraine war.

At the same time, the central bank in the USA is taking a tough stance against high inflation and has already raised key interest rates several times.

That strengthens the dollar.