Topline
As prices continue to climb amid fears that government stimulus spending and a booming recovery may cause the economy to overheat, data released Thursday by the Labor Department shows that consumer prices rose 0.6% between April and May and 5% over the 12 months ending in May—the highest annual rate in 13 years.
Boyer’s cashier Kathryn Laudermilch scans a customers groceries at the Boyer’s Food Markets grocery … [+]
Key Facts
Economists were expecting a 4.7% yearly increase in the Consumer Price Index, which measures changes in the prices of a basket of consumer goods that includes everything from groceries to cars to appliances to clothing.
The Labor Department said prices for used cars and trucks rose 7.3% last month, which accounts for roughly one-third of the price increases overall.
The price of airline fares also rose 7% last month—an indication that demand is surging in one of the industries hit hardest by the pandemic.
Some of the price jumps may also be attributable to a phenomenon called the “base effect”—abnormally low prices during the pandemic last spring mean that price increases this year are somewhat distorted.
Crucial Quote
“Whilst it is true that the pandemic’s economic disruption has radically changed consumers’ spending patterns around the world, raising concerns around increased inflation,” Oliver Wright, Global Consumer Goods & Services Lead at Accenture, said Thursday, “these levels are what we would expect and represent a short-term trend that will correct over time.”
Further Reading
Inflation Surged 2.6% On A Yearly Basis In March—Here’s Why (Forbes)
U.S. Added 559,000 Jobs In May—Less Than Experts Were Expecting But Better Than April’s Dismal Data (Forbes)
