Despite predictions that pricing pressures would ease, the Consumer Price Index climbed 9.1 percent from a year ago, setting a new record high. Among the areas with the largest increases were food, rent, and fuel, further compressing Americans' already tight budgets.

With the price of gas, rent, and groceries all on the rise, the cost of living for American families increased by 9.1 percent year over year in June, the fastest annual rate since 1981. The broad and unexpected price increase presented a problem for the Federal Reserve.

When the Labor Department releases the Consumer Price Index data for June this morning, inflation is expected to be at its highest level in more than 40 years. Prices are likely to have increased by 8.8 percent over the previous year, the fastest rate of increase since 1981. After excluding volatile food and fuel, price increases are slowing slightly, but they are still likely to accelerate.

According to the medians found in a study conducted by Bloomberg, economists anticipated a gain of 1.1 percent from May and an increase of 8.8 percent year-over-year. This was the fourth month in a row in which the annual headline figure was higher than the estimates.

At the opening bell, the S&P 500 index was trading down as rates on shorter-term Treasury securities increased, and the currency gained ground.

The latest round of inflation statistics confirms that price pressures are broad and extreme. Real earnings have fallen by the highest since records began being kept in 2007. President Joe Biden and congressional Democrats, whose support has dropped ahead of midterm elections, are under further pressure due to the inflation report, which will keep Fed officials on an aggressive policy course to rein in demand.

Because gas prices have moderated in recent weeks, the inflation index, which includes food and gas, may slow in July's data. Last month, the national average price of a gallon of regular unleaded gas reached around $5. It was around $4.65 this week.

Beyond the headline figure, the report contained unwelcome news. A core inflation index, which excludes food and fuel prices and provides a sense of underlying inflation trends, remains high and came in faster than economists expected. However, gas prices are volatile and could rise again. The core index increased 5.9 percent year to June, barely slowing from the previous report's 6 percent increase. The core measure increased by 0.7 percent from May to June, which was greater than the previous monthly increase and was bad news for central bankers.

Since the beginning of the coronavirus pandemic, the global economy has been buffeted by a series of shocks.

Factory closures and shipping shortages have strained supply chains; worker shortages make it difficult for airlines to fly at full capacity and hotels to fill rooms. Russia's invasion of Ukraine has disrupted oil and gas supplies.

Economists have spent more than a year attempting to forecast how and when inflation will begin to fall.

"We now understand how little we understand about inflation," Fed Chair Jerome H. Powell said at a recent panel in Sintra, Portugal.

The Federal Reserve, which is in charge of maintaining price stability and guiding the economy toward full employment, is no longer waiting for normalcy to return. Central bankers are concerned that if inflation remains high and persistent, consumers and businesses will become accustomed to it.

If people start asking for higher wages in anticipation of price increases — for example, negotiating cost-of-living adjustments of 6 or 7 percent instead of the typical 2 to 3 percent — companies may try to pass on rising labor costs to customers by raising prices.

This could perpetuate rapid inflation, making it much more difficult for the Fed to combat.

Given the threat, the central bank has increased its attack on inflation.

In March, the Fed raised interest rates from near zero to a quarter point in an attempt to make borrowing money more expensive and slow consumer demand. It increased rates by half an end in May and 0.75 percentage points last month.

Many central bankers have stated unequivocally that they intend to raise interest rates by 0.75 percentage points in July, to reach 3.5 percent by the end of the year. They could do so by raising interest rates by half a point in September and a quarter point in November and December.

The question is whether the data will allow the Fed to ease up on its policy.

The gas outlook is clouded by the possibility of a hurricane season disrupting supply.

Another potential wild card is geopolitics: White House officials are concerned that a new round of European sanctions aimed at reducing the flow of Russian oil by the end of the year will drive up global energy prices again and are working to mitigate that risk.

And other inflationary pressures remain. Rents, for example, account for a significant portion of household budgets and are rapidly rising.

Goldman Sachs economists expect monthly core C.P.I. readings — the gauge that captures underlying inflation pressure — to "remain strong in late summer" and to pick up in the early fall before slowing toward the end of the year.

Effects made by inflation

• Rents have been rapidly rising across the United States for much of the pandemic period, and housing experts warn that they may now receive a boost from an unlikely source: the Federal Reserve. As the Fed raises interest rates to cool the economy and contain rapid inflation, mortgage costs rise, putting home purchases out of reach for many first-time buyers. Suppose people who would have bought a home otherwise stay in apartments or rented houses. In that case, it could exacerbate already-brisk demand, putting downward pressure on rental prices.

• The Fed is expected to raise interest rates by 0.75 percentage points later this month. Still, market pricing predicts an even larger one percentage point increase following the report.
• This report confirmed for American shoppers that the economy is challenging to navigate. Wage increases are not keeping pace with price increases, and the cost of everyday necessities is rapidly rising. Food prices increased 10.4 percent in the year to June, the highest annual increase since 1981.
• At the same time, there are signs that the price of goods may be leveling off.
• Food is significantly more expensive.
• The core index, which strips out the effects of food and fuel price swings to reveal longer-term inflation patterns, rose by a larger amount than predicted and at a faster rate than anticipated in the most recent month, 5.9 percent.

                       U.S. Inflation Soared 9.1% In June, As Prices Continue To Climb