The consequences of the Ukraine war reach as far as the USA. There, too, the price pressure for goods and services is increasing. The inflation rate for June is even higher than experts had expected.

Inflation in the US continues to rise, climbing to its highest level since November 1981. The inflation rate for goods and services rose to 9.1 percent in June from 8.6 percent in May, the Labor Department in Washington said. Experts polled by Reuters had expected only 8.8 percent.

“The overall inflation rate has reached a new inflation peak, despite a strong dampening base effect from the previous year,” said Bastian Hepperle from the private bank Hauck Aufhäuser Lampe. “There is still far too much pressure in the inflation pipeline, so the risk remains high that this will not be the last peak this year. On a small bright spot, the core inflation rate has fallen slightly for the third straight month. At 5 .9 percent but still far too high, so that the US Federal Reserve will increase its key interest rate range again sharply on July 27.”

Material bottlenecks and increased energy costs, also as a result of the Ukraine war, are causing strong price pressure in the USA – but also in Germany and the euro area. 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. In view of the strong job market and the simultaneous high inflation, the Fed recently raised key interest rates more sharply than at any time since 1994. It decided on an increase of 0.75 percentage points to the range of 1.50 to 1.75 percent. For the meeting at the end of July, the monetary authorities are considering a further increase of 0.5 or 0.75 percentage points.

According to estimates by the International Monetary Fund (IMF), the USA may not be able to avoid a recession. Preventing this is increasingly a challenge, according to the IMF country report on the USA. The growth forecasts for 2022 were lowered again – from 2.9 to 2.3 percent. The latest economic data pointed to weaker consumption.

Private consumption plays a more important role in the USA than in other countries such as Germany with its export-oriented industry. For 2023, the IMF estimate for US growth was reduced from 1.7 to 1.0 percent.