The Consumer Price Index (CPI), a measure of U.S. economic inflation, continued climbing quickly in May, surpassing economists’ expectations for another month.
CPI rose 0.6% in May, according to Department of Labor data released Thursday, bringing the annual CPI increase to 5%, well over the 4.7% predicted by economists interviewed by The Wall Street Journal. Core CPI, a measure of consumer good prices minus the more volatile indexes for food and energy, rose 0.7% in May after a 0.9% jump in April.
The jump in overall CPI is “the largest 12-month increase since a 5.4-percent increase for the period ending August 2008,” the Department of Labor reported. The index for core CPI “rose 3.8 percent over the last 12-months, the largest 12-month increase since the period ending June 1992.”
Experts are still unsure of when inflation may slow. Inflation rates are expected to stay high throughout the summer as demand returns after taking a long hiatus during the pandemic. Prices are also rising again after diving at the onset of the pandemic and widespread lockdowns last year. The return to normal pricing levels after the artificial drop is known as the base effect, and experts are still unsure of how much inflation is driven by the effect and how much is due to economic malaise driven by government policies.
Multi-trillion dollar aid packages as well as trillions of dollars more in loans from the Federal Reserve are expected to push prices high, however, as that money works its way into the U.S. economy, drastically expanding the money supply.
April’s CPI report showed that inflation had had the largest annual rise since fall of 2008 after the beginning of the Great Recession. The inflation data was driven by jumps in the prices of used vehicles as transportation picked up after months of COVID restrictions lifted. The data was still much higher than what economists expected for the month of April. As The Daily Wire reported:
The 12-month inflation rate soared past the expectations of economists, who expected inflation to fall around 3.6% and 0.6% lower than the actual 4.2% inflationary spike.
The index for all items less food and energy measures the increase in cost of what economists refer to as a “typical” basket of consumer goods, minus any food or fuel products because those prices tend to fluctuate day-to-day. The index for all items less food and energy, known by economists as “core CPI” because of its relative stability, jumped 0.9% in April, its largest one-month hike since April 1982, according to BLS data.
The new inflation data follows last week’s Department of Labor report showing May was another slow month for job growth, missing economists’ expectations by more than 100,000 jobs. As The Daily Wire reported:
The U.S. economy added 559,000 jobs last month while the unemployment rate fell from 6.1% to 5.8%.
The data, put out by the Department of Labor on Friday morning, fell short of economists’ expectations of job growth but passed expectations for the unemployment rate after April’s disastrous jobs report signaled critical issues in the United States’ recovery. Economists moderated their expectations from April to May, predicting 671,000 jobs added and an unemployment rate of 5.9%, according to The Wall Street Journal.
Experts were closely watching the May jobs report to see if the economy rebounded from April’s disastrous numbers when jobs added fell far short of the nearly 1 million expected and the unemployment rate ticked up to 6.1%. The May report would either confirm or alleviate fears that the April report signaled problems in the U.S. recovery.