June Inflation Soared 9.1 Percent Amid Spiking Gas Prices

Inflation soared to 9.1 percent in June. Driving the stunning jump was the energy index, which contributed nearly half of the overall increase in inflation.—washingtonpost.com

Answer the following questions to check your understanding of the story.

What is the distinction between the inflation rate and a jump in the price of energy?

The inflation rate is the ______________, and a jump in the price of energy is _______________.

a) change in the relative price of all goods in the CPI basket; a change in the relative price of energy

b) increase in the price level; the increase in gasoline and home energy prices

c) rate at which prices on average are rising; a change in the relative price of energy

d) rate at which all prices are rising; the percentage change in the inflation rate due to rising energy prices

Is the price of energy driving inflation or is inflation driving the price of energy?

a) Inflation is driving the price of energy because as expected inflation increases, the prices of all goods, including energy, rise.

b) The price of energy is driving inflation because energy has a large weight in the CPI basket, and energy is needed to produce many other goods and services.

c) The price of energy is driving inflation because the war in Ukraine is decreasing world oil supplies.

d) Inflation is driving the price of energy because energy producers are raising prices to combat rising costs.

June Inflation Soared 9.1 Percent Amid Spiking Gas Prices

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