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US Inflation Hits 40-Year High

Last updated on October 27, 2023

The United States Bureau of Labor Statistics reported on September 13, 2023 that the Consumer Price Index (CPI) for August rose 8.3% year-over-year, the highest rate since 1981. This was the eighth consecutive month that inflation has exceeded 5%, and it is putting a strain on household budgets and businesses across the country.

The main drivers of inflation in the United States include rising energy prices, supply chain disruptions, and strong consumer demand. The war in Ukraine has exacerbated the situation by driving up the cost of oil and other commodities.

The US Federal Reserve is raising interest rates in an effort to combat inflation. However, this is likely to slow economic growth and could lead to a recession.

Significant terms:

  • Inflation: Inflation is a general increase in prices and a decrease in the purchasing power of money.
  • Consumer Price Index (CPI): The CPI is a measure of inflation. It tracks the prices of a basket of goods and services that are commonly purchased by consumers.
  • Federal Reserve: The Federal Reserve is the central bank of the United States. It is responsible for setting monetary policy, which includes setting interest rates.

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