Do you know what happens when the country experiences inflation? In the long run, it decreases the purchasing power. It indicates that the value of your currency will be lower the following day compared to how high it was today. The same thing is currently happening in the United States. US inflation is said to have hit a new 40-year high. Both the White House and other Democrats will be burdened politically, and the Federal Reserve may be compelled to implement a series of interest rate rises that are too aggressive.

According to the Department of Labor, consumer prices increased by 8.6% in May from a year earlier, which was quicker than the 8.3% increase in April. Prices were steadily increasing on a month-to-month basis. With volatile food and energy costs taken out of the equation, core CPI increased by 0.6% from the prior month and 6% from the previous year, above expectations on both counts.

The numbers dashed any hope that inflation had already reached it’s high and was beginning to decline. High food and fuel prices are putting further pressure on the average American’s budget, signaling that the Federal Reserve will have to apply even more pressure to slow the growth. It increases the likelihood of a recession, which some economists had previously predicted would occur in the coming year.

Many Americans are concerned about excessive inflation and disapprove of President Joe Biden’s economic policies. Republicans are targeting Democrats in the run-up to the midterm elections this autumn.

According to Wells Fargo & Co. experts, “tighter monetary policy will not assist much with increasing global commodity prices or fundamental changes in the way people spend and live in the post-pandemic economy,” they wrote.

So far, consumer expenditure has remained stable in the face of inflation, thanks to savings and credit cards. But Some economists are concerned that the Federal Reserve would tighten monetary policy too much, which could lead to reduced consumer spending.

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