Inflation accelerated across the U.S. in May, jumping to 8.6% — the steepest increase since 1981, according to new government data.
The jump in the Consumer Price Index, a broad basket of goods and services, was due mainly to price increases for fuel, food and housing, the Labor Department reported Friday. In April, the CPI rose at an 8.3% annual rate, defying hopes that inflation had peaked. Economists had forecast that the CPI rose 8.2% in May, according to FactSet.
Core inflation, which strips out food and energy prices, increased 6% over the last year.
Prices remain sharply elevated due to Russia's war in Ukraine as well as the U.S. economic rebound from the pandemic, which drove up demand for goods and services that businesses are struggling to meet. Food and energy prices have risen especially fast, which is "a much tougher inflation problem for lower-income households," noted David Kelly, the chief global strategist at JPMorgan Funds.
That financial strain "could result in lower consumer spending on other basic goods and services and, by pummeling consumer confidence, increases the risk of recessionary psychology taking hold," Kelly said in a research note before the latest CPI numbers were released.
This is a developing story and will be updated.