Inflation causes biggest price hike since 2008

The Labor Department released June consumer costs data on Tuesday, showing a 0.9 percent increase in only a month. Consumer prices are up 5.4 percent from last year, the most dramatic 12-month jump since the recession nearly 13 years ago. Rising prices have hit travel-related expenses the hardest. Gas is up dramatically, and sticker prices for used, rental, and new cars have skyrocketed. Due to fewer restrictions and trillions in federal aid, more Americans are traveling again, which raises costs for food, hotels, and airfare.

Why the increase? A sudden uptick in demand created bottlenecks in production, and employers are still struggling to hire workers to make up for layoffs in 2020. Economists also pointed out that some prices, such as airfare, are still below 2019 levels, indicating that the markets are adjusting back to normal levels. Economists at the Federal Reserve expect current spikes to level off as the economy recovers from the pandemic.

Dig deeper: Listen to Nick Eicher interview financial analyst David Bahnsen about inflation on The World and Everything In It.