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U.S. CPI Rose More Than Expected in May, Hitting New 40-Year High

Published 06/10/2022, 08:24 AM
Updated 06/10/2022, 08:35 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- U.S. inflation rose by more than expected again in May, dashing hopes that the rise in the cost of living has peaked. 

The consumer price index rose by 1.0% from April, taking the annual headline rate of inflation to a new 40-year high of 8.6%. Analysts had expected the headline rate to stay at 8.3%, with a monthly gain of only 0.7%.

The core inflation rate, which strips out volatile food and energy prices, also rose by more than expected. It rose 0.6% from April, meaning that the annual rate of core inflation only eased to 6.0% from 6.2%. 

The figures were “ugly”, said Mark Zandi, chief economist with Moody’s Analytics, via Twitter. “There is no good in this, save that it wasn’t even uglier. The typical family must spend about $450 per month more to buy the same goods and services they did a year ago.”

The Labor Department said that the increase in prices was “broad-based, with the indexes for shelter, gasoline, and food being the largest contributors.”

Food and energy represent the largest parts of many households’ spending, and these have risen particularly sharply over the last 12 months. The energy index rose 34.6%, the largest 12-month increase since the period ending September 2005. The food index increased 10.1%, the first time it has topped 10% since the period ending March 1981. 

Airline fares again contributed heavily to the increase, rising by over 10% for the third month in a row to be up nearly 40% on the year. But the malaise extended to more humble types of travel too: the Labor Department noted that public transport costs were up 26%.  

U.S. stocks and bonds sold off immediately on the news, fearing that the Federal Reserve will have to keep prioritizing the battle of inflation for longer, even if the economy slows as a result. Money market futures are now pricing in half-point increases in the Fed Funds target range at each of the Fed's next three meetings in June, July, and September.

"Firmness in rents suggests it is going to be a long year getting inflation down and the Fed's choices are getting harder not easier," said Julia Coronado, a former Fed economist and founder of the consultancy MacroPolicy Perspectives. 

Rents for primary residences rose another 0.6% on the month and were up 5.2% on the year.  

By 8:38 AM ET (1238 GMT), S&P 500 futures were down 58 points, or 1.5%, having traded roughly unchanged in the minutes before the release. Dow futures shed 413 points, or 1.3%, while Nasdaq 100 futures fell 1.6%. 

The yield on the benchmark 2-Year Treasury note, meanwhile, rose by 11 basis points to 2.93%, while the dollar index rose 0.7% to 103.90.

 
 
 

Latest comments

So, 100 bps now on the table.
US is the smartest dictatorship ever existed
Buy physical silver and thank me later...
Seriously though... why do we have a central banking system again?
🤡
Hope the dude who caused this inflation get a massive stroke.
Stop the war in and in c.w. EU-USA-CHN 🤟🤟
Those in power foresaw it, or they skipped there economic history classes.  Russia's invasion adds a little inflationary pressure, but we have had spikes in oil prices before without the massive inflation.  Oil spiked primarily do to the massive amount of money printing by the Fed and other central banks, as it's done in the past.  The last time it breached $100 barrel was after the financial crisis when they were printing like crazy.
ppppppppppopip I am pp
Inflation@8.6,%--US itself has to be blamed for the situation they are in. What was need to impose sanctions on crude from Russia? Couldn't they foresee the ramifications of these sanctions? Now face the music for a long long time to come.
Nah,, russia should suffer for what they have done. In fact, we should place embargo on russia
They foresaw it, and long before the Russian invasion.  Russia's invasion adds a little pressure, but we've had spikes in oil prices before without the massive inflation. Russia is just a convenient excuse. Everyone, except those in government, were warning of this a year ago.  So either those in power are disingenuous and lied, or are not very smart having skipped there economic history classes.
Can anybody tell me what was inflation rate in March which was supposed to be 'peak' ?
Go Fed, Go lower rates waiting for you. Hike 1% in every meet n make it to 10%. The G8 fall of US
My question stands: how can anyone openly admit that voting for Democrats makes anyone's life better? The economic science says otherwise and I thought they were the party of "Follow the Science."
And the answer is that it does not matter which billionaire thieves you put in power. It is all manipulated so people like you think that you have a choice. Two party system needs to go
at what point do Americans force their paid servants in D.C. to #EndTheFed and stop stealing all their wealth? time will tell
I don't think quite understand the role the fed plays if it stays in it's lane, which can be a good one. The biggest issue being the fed pumping billions a day into the repo market which is fed selling treasuries or securities at 1 then buying it back the next day at 2 from those that bought it at 1.The amount daily was insane.
Letsgo brandon
Companies should sell the stocks they bought during buyback bonanza...
and buybacks should be made illegal again. F Reagan
READY FOR GIANT STEPS ON JULY AND AUGUST
US is becoming a KING OF BEGGING.. 🤔🤔 HOPELESS Government
This is best news of the day. As long as cpi remains high, fed has no choice but to increase more interest rate. This will help accelerate the stock market collapse. Hope this will happen soon.
Not to mention higher mortgage rates. Poor souls who will have to refinance ARMs may face financial catastrophe.
u have nothing to do. u flooding the rich with moneyprinter. poor getting poorer, rich is richer. thats what u want fed.
if the big companies go away you won't have a job so...Either you starve a bit or lose your income.
 no - the largest employers combined are small to medium sized businesses - many private and not quoted in the stock exchange - the US became great on the back of millions of small businesses - not giant corporations that contract all their work out to despots on the other side of the planet
Nahhh, there is such a thing as small businesses. Its just monopolies annihilated them all.
It's not the Democrat policys, it's got to be Trump or Ukraine or Putin or Republicans, who is in charge the Democrats!!
Corporations
pouring oil on fire will.. you will also get ur hands burned ..  US had nothing to do with ukrain war but US is the one prolonged this war with weapons.
they do the propaganda to seling weapon
US has loads to do with the war - you need to do some research - why do you think the President's son was a director on the board of a Ukrainian energy company? it wasn't a coincidence just like it wasn't a coincidence that the US agencies were funding the Wuhan lab to create bioweapons with coronaviruses
Old fuoOol Bidet has done more harm to US than Bin Laden
the Bin Laden family were and still are great friends of the Bushes and other powerful families in the US - inside job!!! And Bidet is just a puppet - the FED created this mess mainly with money printing - which always comes back as inflation a year or so down the road.
QE = inflation.
The result of increasing the money supply 40% during Covid. Central bank cartels QE plan was really designed to bring economies to its knees.
The great reset.
seems to be like Joe Biden is dump.his Main motive is to distroy US economy.only barking Russia Russia Russia.
thanks ugly joe
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