U.S. inflation in May saw its highest annual level since December 1981, as soaring energy and food prices accelerated the spike in the consumer price index to 8.6 percent last month, above analyst expectations.
The U.S. consumer price jumped by 8.6 percent over the last 12 months, with the indexes for shelter, gasoline, and food being the largest contributors, the U.S. Bureau of Labor Statistics said on Friday. That’s the largest 12-month increase since the period ending December 1981.
After declining in April, the energy index rose by 3.9 percent over last month, with the gasoline index jumping by 4.1 percent and the other major component indexes also increasing, the Bureau of Labor Statistics said.
Gasoline prices are soaring, putting upward pressure on inflation, while a similar spike in diesel prices weighs on the rising costs of all goods.
Per AAA data, gasoline and diesel prices set fresh records on Friday at $4.986 and $5.753 per gallon, respectively. Gasoline prices are now nearly $2 a gallon higher than the national average $3.073 price at this time a year ago.
According to data from fuel-savings app GasBuddy, U.S. gasoline prices jumped on Thursday to a national average of $5 per gallon.
The $5 threshold had been widely expected for weeks now, considering the rise in international crude oil prices, the constrained refinery capacity in the United States, the robust demand despite record-high prices, and multi-year low fuel inventories in the U.S.
The accelerating inflation in May is yet another headache for the Fed, which has pledged to continue tightening monetary policy until inflation is under control. The Fed has been confident so far that it could engineer a “soft landing” for the U.S. economy and prices without causing a recession.
Following the release of the inflation numbers, stocks fell and oil prices turned lower, too, after having traded slightly up earlier in the day.
By Tsvetana Paraskova for Oilprice.com
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