The monthly rise in the consumer price index, published by the Bureau of Labor Statistics on Friday, was significantly higher than the 0.3% increase in April and above economists’ expectations for a 0.7% rise. The annual inflation rate increased to 8.6%, the highest level since December 1981. Shares fell sharply on Friday, with the S&P 500 falling 2.4% until mid-afternoon in New York and the Nasdaq Composite falling more than 3%. US short-term government bonds, which are more sensitive to monetary policy changes, also sold sharply. The yield on the two-year bond jumped to 3%, the highest level since 2008. Once the volatile elements such as food and energy were removed, the “core” CPI increased by 0.6%, maintaining the same dynamics as the previous month. Prices in other categories in May were 6 percent higher than in the same period last year. Services inflation, non-energy expenses, increased 0.6 percent for the month and increased by 5.2 percent on an annual basis. “There is no doubt that when you look at this report, it seems that inflationary pressures remain high and there does not seem to be immediate relief,” said Pooja Sriram, a Barclays economist. The bank announced on Friday that the Fed will raise interest rates by 0.75 percentage points at its policy meeting next week. Traders have a 50 percent chance of pricing for this result. Monthly inflation is likely to remain high due to high energy costs, with national gasoline prices approaching $ 5 a gallon and a steady increase in services-related costs – such as those related to the travel industry. These gains offset the restraint of spending on certain goods. Sriram said it was difficult to point 8.6 percent to the top, warning that a “fluctuation” in energy prices could push metric inflation to 8.8 percent in the coming months. Rising inflation has become the biggest financial challenge for US President Joe Biden, whose efforts to create one of the fastest labor market recovery in U.S. history have been overshadowed by the tax caused by rising house prices in the United States. , with the consumer climate falling to a record. low in June. Research from the University of Michigan also showed that five- to ten-year inflation expectations rose 0.3 percentage points to 3.3%. Biden on Friday again tried to blame Russian President Vladimir Putin, linking rising gas prices to the Ukraine war. “Pump prices are a big part of inflation and the war in Ukraine is the main reason for that,” he said. He said fighting inflation was his government’s top economic priority, but acknowledged that price pressures “were not falling as sharply and as fast as we should see”. According to the BLS, the increase in “broad base” is mainly due to the increase in energy prices by 3.9% and the increase in gasoline prices by 4.1%. The latter increase by almost 50 percent compared to the same period last year. Food prices rose another 1.2% for the month, a rate that has been roughly maintained since December. In the last 12 months, the so-called home food index has risen by 12 percent, the largest increase since April 1979. Airline fares continued to rise, rising by 12.6 percent in May after rising 18, 6 percent last month. The most worrying, according to some economists, was the 0.6 percent increase in housing costs, the largest monthly increase since March 2004, as rents continued to rise. According to the data, the so-called dead-end rates – measurements of market expectations for inflation in five and ten years – reached their highest level since May.

The Fed has already pledged to move monetary policy “faster” to a more “neutral” level that no longer stimulates the economy, but further evidence that inflation is more entrenched could force politicians to raise interest rates even more dynamically than , what the financial markets expect. The Fed is expected to cut interest rates by half a point at its meeting next week, having achieved the first since 2000 last month, with another size adjustment likely in July. Vice President Lael Brainard recently made it clear that the Fed could continue the half-unit rate until September and will consider returning to more typical quarterly increases only after a “slowdown” in monthly inflation printouts. Some analysts have warned that the range of interest rate hikes by half a unit could extend even further beyond September. “If these high stages continue [as] “We saw this month and what we expect to see in June, which makes a 50 basis point rise in November a special opportunity,” said Alan Detmeister, a UBS economist and former Fed executive. Additional report by Kate Duguid in New York