The Federal Reserve announced a 0.75% increase to its benchmark rate on Wednesday, the biggest single hike since 1994 and one that ratchets up the body’s tactics to quell the highest U.S. inflation in 40 years.

While the Fed had signaled that a series of more modest 0.5% increases were likely this year following their meeting last month, a dismal report released last week pegged U.S. inflation at 8.6%, the highest since 1981 and one showing few signs of slowing down.

The Fed’s three-quarter-point rate increase exceeds the half-point hike that Chairman Jerome Powell had previously suggested was likely to be announced this week. The Fed’s decision to impose a rate hike as large as it did Wednesday was an acknowledgment that it’s struggling to curb the pace and persistence of inflation, which has been worsened by Russia’s war against Ukraine and its effects on energy prices.

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Borrowing costs have already risen sharply across much of the U.S. economy in response to the Fed’s moves, with the average 30-year fixed mortgage rate topping 6%, its highest level since before the 2008 financial crisis, up from just 3% at the start of the year. The yield on the two-year Treasury note, a benchmark for corporate borrowing, has jumped to 3.3%, its highest level since 2007.

Even if a recession can be avoided, economists say it’s almost inevitable that the Fed will have to inflict some pain — most likely in the form of higher unemployment — as the price of defeating chronically high inflation.

After a small dip in April, U.S. inflation hit 8.6% in May. The Consumer Price Index report, released by the U.S. Department of Labor on Friday, found the price increases were broad-based, with the indexes for shelter, gasoline and food being the largest contributors. After declining in April, the energy index rose 3.9% over the month with the gasoline index rising 4.1% and the other major component indexes also increasing. The food index rose 1.2% in May as the food at home index increased 1.4%.

U.S. consumers are now paying for groceries that are up 11.9% over last year, gas that’s up 48.7% over 2021 and shelter expenses that have risen 5.5% since May 2021.

Prices of new and used vehicles also continue to surge, up 12.6% and 16.1%, respectively.

America’s rampant inflation is imposing severe pressures on families, forcing them to pay much more for food, gas and rent and reducing their ability to afford discretionary items, from haircuts to electronics. Lower-income and Black and Hispanic Americans, in particular, are struggling because, on average, a larger proportion of their income is consumed by necessities.

Contributing: Associated Press