Inflation Hits 40-Year High As CPI Rises 8.6% In May

(June 10th, 2022 - Alexandra Semenova)

U.S. consumer prices accelerated in May at the fastest rate since 1981, as Americans grapple with a surge in the cost of gas, food, and shelter, data showed Friday.

The Bureau of Labor Statistics' May Consumer Price Index (CPI) showed a year-over-year increase of 8.6% last month, up from 8.3% in April. Economists were expecting an 8.3% increase in May, according to estimates compiled by Bloomberg.

On a month-over-month basis, the broadest measure of inflation climbed 1.0%, compared to 0.3% in April. "Core" inflation, which strips out the more volatile costs of food and gas, rose 6% over the prior year in May, more than the 5.9% that was expected.

The biggest contributors to the latest jump in inflation were shelter, gasoline, and food, according to the BLS. The energy index rose 3.9% month-on-month in May, with the gasoline index rising 4.1%. Compared to the prior year, energy prices in May were up 34.6%, the most since September 2005.

Meanwhile, the food index rose 1.2% from April to May and 10.1% over the prior year, the largest jump since March 1981.

The cost of shelter rose 0.6% in May when compared to the prior month, the largest jump since March 2004. Owners' equivalent rent, a component of the shelter index, rose 0.6% in May, the most since August 1990.

Also driving the index higher were airline fares amid a surge in fuel prices and pent-up demand for travel as COVID restrictions ease. The price of airline fares rose 12.6% in May, though this marked a slight moderation from April's 18.6% increase.

“The increases were nearly ubiquitous – just no place to hide," Bankrate Chief Financial Analyst Greg McBride said. “With food, energy, and shelter prices continuing to escalate at the fastest pace in decades, any relief for household budgets remains elusive.”

Beyond serving as a gauge of the costs everyday Americans shell out for groceries, gas, housing and other goods and services, May’s consumer price index comes just before the Federal Reserve is poised to further ramp up interest rates at its policy-setting meeting next week.