Inflation in the United States accelerated to 8.6% in May, the sharpest rise since 1981, according to the new government.
The Labor Department said on Friday that the jump in the Consumer Price Index, which is a broad basket of goods and services, was mainly due to rising fuel, food and housing prices. In April, the CPI rose to 8.3% year-on-year, beating expectations that inflation would peak. According to FactSet, economists forecast an 8.2% increase in CPI in May.
Core inflation, which has pushed down food and energy prices, rose 6% last year. Although it was lower than 6.2% in April, Michael Pearce of Capital Economics said recent inflation data showed very little sign of declining inflation.
Still looking for a summit
Rising inflation last month shattered expectations that price increases would soon subside and gave consumers and businesses some respite. However, Russia’s war in Ukraine has pushed up fuel prices, with gasoline prices setting new records in May and June. According to the AAA, the average price of gas rose by 13 cents this week alone, reaching a record high of $ 4.99 per gallon without ordinary lead, up from $ 3.07 a year ago.
Greg McBride, chief financial analyst at Bankrate, said: “There’s a lot to think about when inflation is at its peak.” “Consumer prices exceeded expectations – and not in a good way – with the annual growth rate of 8.6%, the fastest in more than 40 years. Worse, the increases were almost everywhere. There is simply no place to hide.”
Shares of futures fell on the eve of trading, signaling that investors feared the Federal Reserve might have to raise interest rates faster than expected to put an end to the hottest period of sustained inflation since the 1970s. Which is the US Federal ReserveIn March, it is expected to announce another half-point increase in benchmark rates next week.
Prices will remain high as the economy recovers from a pandemic that is increasing demand for goods and services that businesses are struggling to meet. According to some experts, May data show that inflation has not yet reached its peak.
Sal Quatieri, chief economist at BMO Capital Markets, said, “U.S. inflation accelerated in May, almost every item was higher, and another major breakthrough indicates that the peak could be some way.” “In response to tighter monetary policy, there is very little respite from four decades of high inflation until energy and food spending fall and excess demand pressures ease.”
Food prices have risen by 10%
CPI data show that food expenditures increased by 10.1% compared to the previous year. Gargi Chaudhuri, head of iShares Investment Strategy Americas, said in an email after the data was released that it was the fastest pace for food since 1981.
“Significant increases in food prices include a 14.2% annual increase in meat, poultry, fish and egg prices, a 15.9% annual increase in milk prices and a 15.3% annual increase in coffee prices,” Chaudhuri said.
Bankrate’s McBride noted that with rising prices for basic necessities such as food, housing and gas, “any assistance to household budgets remains difficult.”
Other items that have risen sharply over the past year, according to May inflation data:
- Fuel oil – 106.7%
- Gasoline – 48.7%
- eggs – 32.2%
- Natural gas – 30.2%
- Used cars / trucks – 16.1%
- Air ticket – 12.6%
- Fruits / vegetables – 8.2%
Severe inflation is a major blow to consumer confidence. The University of Michigan’s confidence index fell to its lowest level in 50 years in early June.
“Overall, gas prices have hit consumers hard, which is not surprising given the 65-cent increase in national gas prices since last month,” said Joanne Hsu, director of the survey.
While declining consumer confidence may slow economic growth, it may also help cool inflation by reducing demand for gas and other products.
Inflation rose 8.6 percent last year, the fastest since 1981
Source link Inflation rose 8.6 percent last year, the fastest since 1981