The Labor Dept. said Thursday that America’s consumer price index increased 5% year over year for May, higher than the 4.7% that was expected. The reading was also higher than last month’s 4.2% number.
Prices went up 0.6% month over month, faster than the 0.4% growth that was predicted by analysts polled by Refinitiv.
The yearly numbers have a “base effects” tilt because of the decline in prices that happened during the pandemic.
Used vehicle prices went up by a large 7.3%, accounting for almost one-third of the index’s increases. Food, meanwhile, increased by 0.4% meeting April’s rise. Energy was unaltered from the month of April as a lowering in gasoline was offset by a rise in electricity and natural gas prices.
Core CPI, which does not include energy and food, in May went up 3.8% annually, the biggest jump since June of 1992. Core prices grew 0.7% month over month, beating the 0.4% increase that was predicted. The index rose 0.9% in the month of April.
Upward pushing pressure on prices has been seen in wide parts of America’s economy as businesses attempt to find materials because of supply bottlenecks that happened as a result of covid. Some businesses are also having a hard time filling jobs due to unemployment benefits encouraging workers to not work.
The heated inflation reading comes as the Fed next week is scheduled to hold its June meeting. Investors will be watching closely to the central bank’s statements on when it might start tapering its asset buying program and start raising rates.
Jerome Powell, the current Federal Reserve Chairman has stated that he believes the upward pressure to be temporary.
Author: Scott Dowdy