U.S. consumer inflation surged to a four-decade high of 8.6% in May as increasing energy and food costs pushed prices higher.
The data released by the Labor Department on Friday said that the consumer price index increased to 8.6% from the same month a year ago, the biggest increase since December 1981.
CPI, which measures what consumers pay for goods and services, jumped to 1% compared to April, after the modest 0.3 percent gain in the prior month, far higher than expected by analysts who were looking for inflation pressure to ease slightly.
May’s increase was driven by sharp rises in energy, which rose 34.6% from a year earlier, and groceries, which jumped 11.9% on the year, the biggest increase since 1979.
Food and fuel prices have soared in recent weeks since the Russian invasion of Ukraine sent global oil and grain prices up, and American drivers are facing daily record gas prices.
The data showed that gasoline jumped 4.% in the month, with big gains in housing, airline fares, and used and new vehicles.
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Prices for used cars and trucks rose 1.8% in May from April. Housing was up at 5.5% and airline fares rose to 12.6% on the month, the third straight double-digit rise.
On a 12-month basis, the core-price index increased 6% in May, down from 6.2% in April. March’s 6.5% rise was the highest rate since August 1982. The annual rate of inflation has risen sharply since early 2021, when the U.S. economy’s rebound from the pandemic accelerated, leading to supply disruptions and other imbalances that put upward pressure on prices for longer than policymakers anticipated.
The Feds have been watching closely for signs that inflationary pressures are ebbing and will meet again this week to consider whether to raise rates aggressively to tame inflation. Feds officials on May 4 lifted short-term interest rates by 0.5%, marking the largest increase in rates since the year 2000.
