Consumer prices in the U.S. shot up by more than expected in the month of May, according to a highly anticipated report released by the Labor Department on Friday.
The Labor Department said its consumer price index jumped by 1.0 percent in May after rising by 0.3 percent in April. Economists had expected consumer prices to increase by 0.7 percent.
With the bigger than expected monthly increase, the annual rate of consumer price growth accelerated to 8.6 percent in May from 8.3 percent in April, showing the biggest surge since December 1981. The annual growth was expected to be unchanged.
The monthly jump in consumer prices was partly due to a substantial rebound in energy prices, which soared by 3.9 percent in May after tumbling by 2.7 percent in April.
Food prices also continued to see notable growth, jumping by 1.2 percent in May following a 0.9 percent advance in the previous month.
Excluding food and energy prices, core consumer prices climbed by 0.6 percent in May, matching the growth seen in April. Core prices were expected to rise by 0.5 percent.
The increase in core prices partly reflected higher prices for shelter, airline fares, used cars and trucks, and new vehicles.
Meanwhile, the annual rate of core consumer price growth slowed to 6.0 percent in May from 6.2 percent in April. Economists had expected the pace of growth to decelerate to 5.9 percent.
“The bigger increases in core prices a year ago meant that core inflation still edged down to 6.0% from 6.2%, but there is very little in the details of this report to suggest that inflationary pressures are easing,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “Together with the continued strength of the latest activity data, that bolsters the argument of the hawks at the Fed to continue the series of 50bp rate hikes into September and beyond, or even to step up the size of rate hikes at coming meetings.
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