May Inflation Rate at Four-Decade High of 8.6%

Experts’ predictions of 8.3% were outpaced with an actual 8.6% increase.

  • Data from the Bureau of Labor Statistics indicate that the consumer price index has risen one percent month over month, leading to big changes in the cost of everyday goods.
  • The annual inflation rate jumped to 8.6% in the month of May, reaching even higher than the estimated 8.3% in expert projections.
  • Additionally, the price of food increased 10.1% and energy was up a whopping 34.6%, creating a frustrating environment for Americans already struggling with the economic downturn.
  • Other aggressive increases are seen among foods: beef (+10.2%), pork (+13.3%), ham (+11.1%), and chicken (+17.4%).
  • Eggs are up 32.2%, milk advanced 15.9%, fruits and vegetables increased 8.2% and coffee rose at a remarkable pace of 15.3%.
  • Shelter costs increased 5.5% and airline fares increased 37.8% as a companion increase to the rising fuel prices and high travel demand.
  • “The biggest increases are coming in categories that are absolute necessities—shelter, food, and energy,” Greg McBride, the senior vice president and chief financial analyst at Bankrate said. “This is why we’re beginning to see signs of strain among consumers that are dialing back discretionary spending or looking to economize as much as possible.”
  • Mohamed El-Erian is a top economist and chief economic advisor at Allianz and has been skeptical of claims that inflation has reached a peak. “Brent #oil ended the trading session at $124, up 3% on the day (WTI at 123),” he wrote in a tweet on Wednesday. ” If this recent leg up in oil prices persists, it will put in serious doubt the call of an “#inflation top” that quite a few on #WallStreet embraced.”
  • “Amplifying the economic/social/political discomfort, headline is a new high for this inflation cycle,” he wrote on Twitter. “Also, if the first 10 days of June are anything to go by, the next monthly measure would be higher.”
  • Euro Pacific Capital chief economist and strategist Peter Schiff rebuffed the idea that inflation has peaked, saying that inflation is going to get much worse. “This inflation is just getting started. I mean, we’ve had it for a long time in financial assets, but now it’s finally moved into consumer goods and it’s got a long way to go,” he said.
  • American families are paying, on average, about $311 more per month for food and services, according to recent estimates.
  • One survey found that consumers are cutting costs by reducing their dining out, driving, canceling trips, and ending their monthly subscriptions.