US Inflation Touches 40-year High, Consumer Prices Rises 8.6%

Inflation remained uncomfortably high in May, with consumer prices reaching a new four-decade high, exacerbating millions of Americans’ financial hardships and exacerbating President Biden’s political predicament.

The consumer price index, a broad measure of the price of everyday products such as gasoline, food, and rents, climbed 8.6 percent in May from a year ago, according to the Labor Department. In the one-month period following April, prices increased by 1%. Both of these statistics were higher than Refinitiv economists’ predictions of an 8.3 percent headline figure and a 0.7 percent monthly growth.

Rapid Price Growth & The Biden Admin’s Response

Since December 1981, this is the fastest rate of inflation.

Core prices, which exclude more volatile measures like as food and energy, rose 6% year over year, also exceeding Refinitiv’s expectations. Core prices increased 0.6 percent month over month, indicating that underlying inflationary pressures are still high.

“What a dreadful CPI print. Not only was it greater than projected on practically every front, but pressures were also visible in the market’s more volatile areas “Principal Global Investors’ chief strategist, Seema Shah, agreed. “However long it takes for inflation to fall, it will be painfully slow.”

Inflationary pressures have put a strain on most American households, forcing them to pay more for basic essentials like food, gasoline, and rent. Low-income Americans bear a disproportionate share of the expense, as price changes wreak havoc on their already tight paychecks.

Average Wages

The big salary gains that American worker have witnessed in recent months are being eaten away by rising inflation: According to the Labor Department, real average hourly wages fell 0.6 percent in May compared to the previous month, as inflation eroded the 0.3 percent total wage increase. In May, real earnings fell by 3% on a year-over-year basis.


About the author

Subhashree Panda

Subhashree has a Master's in Robotics and is fascinated by artificial intelligence. She covers the latest advancements in AI, machine learning, and robotics. Subhashree is also a robotics hobbyist and enjoys building small robots in her free time.