A highly anticipated report released by the Labor Department on Thursday showed consumer prices in the U.S. increased by more than expected in the month of May.
The Labor Department said its consumer price index rose by 0.6 percent in May after climbing by 0.8 percent in April. Economists had expected consumer prices to increase by 0.4 percent.
About one-third of the increase in consumer prices was due to a 7.3 percent spike in prices for use cars and trucks. Food prices also rose by 0.4 percent, while energy prices were unchanged.
Excluding food and energy prices, core consumer prices climbed by 0.7 percent in May following a 0.9 percent advance in April. Core prices were also expected to rise by 0.4 percent.
The continued increase in core prices reflected the jump in prices for used cars and trucks as well as increases in prices for household furnishings and operations, new vehicles, airline fares, and apparel.
The report also showed consumer prices in May were up by 5.0 percent compared to the same month a year ago, reflecting the biggest spike since August of 2008.
The annual rate of core consumer price growth also accelerated to 3.8 percent in May, which represents the biggest jump since June of 1992.
“Price increases stemming from the reopening of the economy and ongoing supply chain bottlenecks will keep the rate of inflation elevated and sticky as supply/demand imbalances are only gradually resolved,” said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.
She added, “While we share the Fed’s view that this isn’t the start of an upward inflationary spiral, we look for inflation to remain persistently above 2% through 2022.”
Next Tuesday, the Labor Department is scheduled to release a separate report on producer prices in the month of May.
Economists currently expect producer prices to increase by 0.5 percent, while core producer prices are also expected to rise by 0.5 percent.
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