Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Consumer prices jumped 5% in May, the fastest pace since the summer of 2008

Consumer prices jumped 5% in May, the fastest pace since the summer of 2008

Consumer prices in May accelerated at their fastest pace in nearly 13 years as inflationary pressures continued to build the U.S. economy, the Labor Department reported Thursday.

The consumer price index, which represents a basket of food, energy, groceries, housing costs and sales across a product spectrum, rose 5% from a year ago. Economists surveyed by the Dow Jones had expected a gain of 4.7%.

The reading represented the largest increase in CPI since the 5.3% rise in August 2008, just before the worst of the financial crisis sent the US into the worst recession it had seen since the Great Depression.

Although inflation readings have been high overall since the financial crisis, the Federal Reserve has largely been dismissive of the figures. Central Bank officials believe that the current increase is due to temporary factors that will slow down as the year goes on and look higher due to comparisons with the previous year, where much of the economic activity remained limited due to pandemic measures.

Therefore, market participants generally do not expect to see the Fed respond to the latest figures when the Federal Open Market Committee’s policy decision meets next week.

Used car and truck prices continued to rise higher, rising 7.3% during the month and 29.7% in the last 12 months. However, the energy index was almost flat for the month despite the huge rise in petrol prices this year, while the food index repeated its rise in April of 0.4%.

The petrol index has risen by 56.2% over the last year, which is part of an overall increase in energy of 28.5% during the period. Food prices have remained relatively tame, an increase of 2.2% over the 12-month period.

A separate meter, which excludes volatile food and energy prices, rose 3.8% against the Dow Jones estimate of 3.5% for so-called core inflation. It was the fastest pace since May 1992.

Another report released Thursday showed that unemployment claims for the week ending June 5 came in at 376,000. The estimate was 370,000. The total number still marked the lowest of the pandemic time.

However, investors remain strongly focused on inflation, which has not been a major threat to the US economy since the early 1980s.

On a monthly basis, the overall CPI increased by 0.8% while the core increased 0.7%. The estimate was 0.5% for both measurements.

Markets largely withdrew from Thursday’s Inflation Report, with futures in the stock market indicating a gain in the open, although government bond yields moved higher. Benchmark 10-year government bonds last traded near 1.52%.

Prices were under pressure across a number of sectors as the economy continued to recover from the harsh restrictions imposed by officials during the pandemic.

Household furniture and operations rose 1.3%, the biggest gain month-over-month since January 1976. Airline tickets continued their rise higher, rising 7% as more passengers take to the skies. Car rental rose along with sales prices and rose 12.1% to a 16.2% increase from April.

This is news. See here for updates.

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