Inflation hit 9.1% in June, highest rate in more than 40 years

Inflation hit a fresh 40-year record in June, with consumer prices increasing 9.1% over the last 12 months, the Labor Department said Wednesday.

It's the fastest increase in prices since November 1981, and above what economists had expected. The increases were broad-based: Rent, new and used vehicles, car insurance and medical care all rose in June, the government report said.

Core inflation, which strips out volatile food and energy prices, rose 5.9% over the last 12 months, slowing its pace from May.

"Price pressures have broadened to virtually every major line item within the inflation categories," Gargi Chaudhuri, Head of iShares Investment Strategy Americas at BlackRock, said in a research note. "Core inflation is still high, but the drastic difference between headline and core shows how much the recent move in prices has been driven by food and energy price volatility resulting from supply shortages," Chaudhuri added.

Airfares and hotel costs were among the few categories to drop in price in June.

It's likely inflation cooled in July, as the price of gas has declined from an eye-watering $5 a gallon average  in mid-June to an average of $4.66 nationwide as of Tuesday. 

Nonetheless, rising prices have caused a sharp drop in confidence in consumers. Forty percent of U.S. adults said tackling inflation should be a top government priority this year in a June AP-NORC poll, up from just 14% in December.

Inflation has become the most pressing economic concern for Americans — as well as a political albatross for the Biden Administration. The Federal Reserve has been hiking interest rates at the fastest pace in more than two decades as it tries to tame surging prices.

This is a developing story and will be updated. The Associated Press contributed reporting.