Inflation continued accelerating in June after showing an increase in May, a potentially negative sign for crypto markets that have faltered as the Federal Reserve raises interest rates in response to soaring prices.
The Consumer Price Index (CPI), which tracks price movements across a broad range of goods and services, rose 9.1% in the 12 months through June, which is the largest 12-month increase in over 40 years, the Bureau of Labor Statistics (BLS) reported Wednesday.
The price of energy for consumers has risen by 41% in the past year, and electricity has become nearly 14% more expensive in the 12 months through June, indicating the largest yearly increase since 2006.
Today’s inflation report will likely cement its ambitions to deliver another rate hike of 75 basis points later this month, as it tries to rein in inflation aggressively by making it more costly to borrow, thus cooling the economy.
Rising interest rates have made stocks and other risky assets less attractive when compared to corporate bonds and U.S. treasuries, which have lower yields but are backed by the government in terms of gains. They are considered among the safest investments, and that’s leading institutions to divest from cryptocurrencies.