(The Hill) – Consumer inflation is still shooting upward despite interest rate hikes from the Federal Reserve and a host of policy responses from lawmakers over the past several months aimed at fixing supply chains.

The Labor Department reported Wednesday that the consumer price index (CPI) increased 1.3 percent from May to June and was up 9.1 percent over June of last year, the highest rise since 1981.

Inflation dipped briefly this year from April to May, but otherwise has been steadily rising since May of 2020.

There’s already been an outcry from lawmakers about the latest numbers.

“Today’s consumer price inflation reading of 9.1 percent is a painful reminder that Americans’ paychecks continue to be strained by the high inflation that was fueled by Democrats’ untargeted and partisan spending spree.  As the economy faces runaway inflation and rising odds of a recession and stagflation, raising taxes, killing jobs, smothering wages and imposing price controls makes no sense,” leading Senate Finance Committee Republican Mike Crapo (Idaho) said in a Wednesday statement.

House Speaker Nancy Pelosi (D-Calif.) has called attention to the tense geopolitical situation following the Russian invasion of Ukraine earlier this year as an important driver of inflation.

In a Tuesday tweet, she said, “As we face Putin’s price hike at the pump and in the grocery aisle, nearly every member of the House GOP voted NO on a package of bipartisan bills that lower the costs of food and fuel for hard-working families,” referring to legislation advanced earlier this year.

Here are five takeaways from the latest inflation numbers:

Food and energy prices are hitting Americans the hardest

Economists tend to separate out food and energy prices from what they call “core inflation” since those categories tend to be the most volatile. But those are also the categories in which Americans feel price increases most acutely.

Energy prices rose 7.5 percent from May to June and contributed nearly half of the overall increase, with the price of gasoline going up by 11.2 percent, according to the Labor Department.

Annually, energy prices are up 41 percent, with energy commodities up more than 60 percent.

Food prices are up more than 10 percent on the year, and the price of groceries — or the “food-at-home” index — has risen more than 12 percent.

Without the food and energy categories, annual core inflation dropped in June to 5.9 percent from 6 percent in May.

“But don’t get too excited,” Harvard economist Jason Furman tweeted. “This is probably not telling you what you think it is. All it says is that core inflation in the month of June-22 was slightly lower than it was in June-21.”

“That means that IF every month going forward looked like June then core inflation would eventually rise from its 5.9 percent 12-month change to something like an 8-percent or 9-percent change. Now I don’t expect that to happen for many reasons, but the new info in June was net worse, not better,” he wrote.

Chance of big interest rate hike from the Federal Reserve is growing

The Fed is in charge of the U.S. money supply and monetary policy, and the monetary response to rising inflation is typically to increase interest rates.

The Fed has been raising rates since earlier this year. Earlier in the year, the central bank said it intended to raise rates by 50 basis points, or half a percent, throughout the year. But its last rate hike was 75 basis points, indicating growing urgency about inflation that it had initially said was “transitory.”

Now, the chances of even bigger rate hikes are increasing.

A market odds algorithm from derivatives exchange CME now puts the chances of a 100-basis point rate hike at more than 40 percent, up from zero percent a week ago.

Rate hikes from the Fed determine the rates at which banks and other financial institutions can borrow money from each other.

This action translates down into more expensive credit markets for consumers who make payments with financing plans for things like mortgages, auto loans and credit card interest fees

Pressure on lawmakers to deliver supply side fixes for inflation increases

President Biden said Wednesday that he will urge lawmakers to use their fiscal policy powers to bring down prices on a variety of goods and services for Americans.

“I will urge Congress to act, this month, on legislation to reduce the cost of everyday expenses that are hitting American families, from prescription drugs to utility bills to health insurance premiums and to make more in America,” Biden said in a statement on Wednesday.

Lawmakers have already tried to address inflation with new legislation like the Ocean Shipping Reform Act passed last month and signed into law by Biden. Lawmakers said the act would help to unclog ports — the site of shipping bottlenecks that have increased transportation costs — as well as check the overall bargaining power of the international shipping industry.

Facing various types of new regulation, U.S. businesses are advancing their own legislative agendas against rising inflation.

“Inflation rose 9.1 percent over 12 months! Why hasn’t the administration cut tariffs? Why are they restricting future domestic oil & gas production? Why isn’t Congress working to expand legal immigration? Why is Congress breathing life into a bill to raise taxes on domestic investment?” Neil Bradley, head of policy at the U.S. Chamber of Commerce, said in a Wednesday morning tweet.

Some economists, however, point to record profits of companies in the private sector as a key driver of inflation.

“This morning’s report highlights the fact that aggressive interest rate hikes by the Fed have done little to combat the inflation that continues to take a toll on workers, families, and small businesses across the country. Additional rate hikes would push millions out of work and further raise the risk of a recession that would only worsen economic pain,” progressive economic research organization Groundwork Collaborative said in a statement. 

“Policymakers must tackle inflation at its source: by addressing the rampant corporate profiteering and snarled supply chains that are causing significant financial hardship across the country,” the group said.

Markets could continue to fall and threat of a recession looms

The chances of a recession are growing.

Deutsche Bank researchers launched a new research series devoted to the likelihood of a recession, writing in a note last week that “recession [fears] are boiling to a fever pitch.”

“In the US, jobless claims continued to tick higher, which our US economists have shown are one of the best leading indicators of recession risk,” Deutsche Bank strategist Tim Wessel and his co-authors wrote in a note to investors.

Since the Fed started raising interest rates in March, the S&P 500 stock index is down almost 9 percent. The Dow Jones Industrial Average is down more than 6.5 percent during the same period and is down almost 16 percent since the beginning of the year.

Technology stocks, whose companies tend to have a lot of debt that’s vulnerable to rising interest rates, have been hit particularly hard. The technology-heavy Nasdaq stock index is down more than 10 percent since rates started going up and is down nearly 30 percent since January.

The geopolitical environment is still bad for inflation

Fiscal and monetary policy are both tools at the disposal of elected officials and regulators to fight inflation. But the geopolitical environment is mostly out of their control, and there’s still a lot to worry about on this front.

The BA.5 coronavirus omicron subvariant, which scientists say could be more contagious than other variants, is threatening new economic lockdowns in some parts of the world.

The war in Ukraine has continued to rage on, with Donetsk Gov. Pavlo Kyrylenko reporting a buildup of Russian troops in the Bakhmut and Siversk areas. The mayor has also called for an evacuation of civilians, according to media reports.

The continued conflict has implications for global energy and food prices.

Moreover, the supply chain issues that most economists agree lie at the heart of inflation following the pandemic don’t show any signs of righting themselves. Just this week, Treasury Secretary Janet Yellen was in Japan to discuss supply chain restructuring, a long-term logistical process that promises no quick fixes for high prices.