US inflation rises at fastest rate since January 1991

Official inflation statistics published by the Labour Department have revealed that US inflation has hit the highest point for 17 years.

Prices in the US increased by 5.6% in the 12 months to July and the rate of inflation was much higher than economists had forecasted, pushed higher by the increases in energy prices and food costs which were 30% higher and 6% higher respectively.

Increased costs has meant that Americans are struggling to cope with day-to-day living after results from Realtytrac today discovered that over 272,000 people in the US were issued with a foreclosure notice last month, an increase of 55% compared with last year.

Despite the rise in inflation, economists are forecasting that the rate will begin to ease from next month due to the recent decline in the price of oil.

Last month, oil reached a peak of $147 a barrel but has fallen considerably since.

Last week, the US Federal Reserve left interest rates unchanged at 2% as it battles with high inflation and a possible recession.

Interest rates in the US have been on hold since April after aggressive cuts in late 2007 and early 2008.

In the meantime, earlier this week, it was revealed that the UK’s annual rate of inflation has surged to a record high of 4.4% in July. Inflation in the UK is now at its highest level since current records began in 1997.

The figure is up from 3.8% in June and is more than double the Government’s target of 2% and above analysts’ forecast of 4.2%.

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