Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. Reuters / BRENDAN MCDERMID

U.S. stock index futures fell sharply on Wednesday after hotter-than-expected inflation data in June sparked fears that aggressive monetary policy tightening by the U.S. Federal Reserve will push the economy into a recession.

The Labor Department's report showed the Consumer Price Index (CPI), which tracks the prices that urban consumers spend on a basket of goods, rose in June on both a monthly and annual basis by 1.3% and 9.1%, respectively. [nL1N2YT184]

Economists polled by Reuters had forecast the monthly CPI to increase by 1.1% and the annual figure by 8.8%.

The so-called "core" CPI, which excludes volatile food and energy prices, rose to 5.9% year-on-year.

The 40-year-high inflation data makes the case for 75 basis points interest rate hike next week and comes ahead of the second-quarter earnings season, which will be kicked off by JPMorgan Chase & Co and Morgan Stanley on Thursday.

As central banks move to aggressively raise borrowing costs to stamp out runaway inflation, fears of an economic downturn have escalated, sparking one of the worst Wall Street selloff in decades in the first half of the year.

At 8:35 a.m. ET, Dow e-minis were down 337 points, or 1.09%, S&P 500 e-minis were down 59.5 points, or 1.56%, and Nasdaq 100 e-minis were down 259 points, or 2.2%.