The indicator for the basic CPI, which removes volatile food and energy prices, increased by 6% in the same period, higher than the level of the previous month. Both measurements are among the biggest price jumps consumers have experienced since 1981. Overall, the increases were higher than forecast by economists, who expected prices to jump 8.3% in the 12 months to May, which would be in line with April prices. This report shattered hopes that inflation had peaked earlier this year. “Inflation is rising and widening as the outlook worsens,” said Sung Won Sohn, a professor of economics and economics at Loyola Marymount University in Los Angeles. “The likelihood of a recession next year is about to rise. Inflation is eroding the purchasing power of consumers. Given that consumer spending accounts for about 70% of the economy, a real reduction in consumer spending would hit the economy hard.” The typical U.S. household spends about $ 460 more each month than it did last year to buy the same basket of goods and services, said Mark Zandi, chief economist at Moody’s Analytics. Energy prices rose 34.6% year-on-year due to a nearly 50% rise in gas prices last year. The monitoring of gas prices by AAA shows that the price of a gallon of natural gas nationally is now at $ 4.99, after recording a record in 31 of the last 32 days. The CPI report for June, which is expected next month, is sure to show another big jump in gas prices. But increases in energy prices were not limited to record gasoline prices. Electricity prices have risen 12% in the last 12 months, the largest annual increase since 2006. And the price of gas used by consumers has risen by 30.2%, the biggest jump since 2008. Higher energy prices alone added 2 percentage points to the total CPI. It is not just energy that raises prices. The Ministry of Labor said that almost all the main elements that make up the index showed increased prices. Prices for food purchased for home consumption increased by 11.9%, the largest increase in 12 months since 1979, with eggs rising by 32.2%, milk by 15.9% and poultry by 16.6%. The Housing Index, which measures rents and other housing costs, rose 5.5 percent, the biggest gain in 12 months since 1991. Although this may not be as high as double-digit price increases in other categories, Money that consumers spend on their home, whether renting or buying, is usually the biggest expense they make every month. Used car prices, which have shown signs of easing with monthly declines over the past three months, have risen again, rising by 16.1% in the last 12 months. Meanwhile, new car prices rose 12.6% over the same period. The lack of computer chips has limited production in the automotive industry and this limited stock is responsible for rising prices. Strong demand for air travel at the start of the summer travel season also boosts air fares, which rose 12.6% month-on-month in May, the third consecutive monthly increase of more than 10%. In the last 12 months, air fares increased by 37.8% and fares in May are 21.7% higher than in May 2019, before the pandemic caused an almost cessation of demand for air travel. The continuing high inflation rate means that the US Federal Reserve is not sure that it will continue to raise interest rates aggressively when it meets next week. At its meeting in May, the Fed raised interest rates by half a percentage point, the first such move in 22 years. Another half-point increase is possible at next week’s meeting, with some meteorologists now calling for a three-quarter increase in light of Friday’s report. However, there are concerns that the Fed’s monetary tightening could plunge the US economy into recession. This has been a major factor in the sharp drop in US stock prices in recent months that has wiped out much of household wealth. Shares fell again on Friday after measuring inflation. “Inflation is proving more persistent than was widely believed a year ago, when the transition was buzzword,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “The two key questions now? How far will the Fed go to reduce inflation and how far can the Fed go without pushing the economy into recession?” While the inflation report brought new attacks on the Biden government by Republicans, the White House has tried to blame the worst of inflation on rising oil and gasoline prices following Russia’s invasion of Ukraine. “Today’s inflation report confirms what Americans already know. Rising Putin prices are hurting Americans hard,” said President Joe Biden at the Los Angeles port, where he was leaving a regional summit to address what his team considers it the most pressing current issue. : high prices on everything from gas to grocery stores. Biden also tried to acknowledge the pain Americans are experiencing, explain how he was trying to resolve it, and blame others. “I understand,” Biden said. “Inflation is a real challenge for American families.” He toppled shipping groups for raising prices and oil companies for buying their shares, citing oil giant Exxon for making “more money than God” last year. – CNN’s Kevin Liptak contributed to this report.
