Prices Rise at Fastest Pace in Years – Inflation Rears Its Ugly Head

-

- Advertisement -

U.S. inflation in May rose 5 percent from a year ago, recording the biggest annual spike since 2008 as supply bottlenecks and surging household demand continue to push prices higher.

While transitory factors continue to lift prices, the economy sees more signs of continuing inflationary pressures, according to analysts, which may point to persistently high inflation.

The Labor Department announced that the consumer price index increased 0.6 percent in May on a monthly basis, just above the consensus forecast of 0.5 percent.

- Advertisement -

The rise in used car prices accounted for about a third of the increase in overall inflation. Prices for used cars and trucks jumped 7.3 percent in May, following a 10 percent increase in April, as global semiconductor shortages continue to affect new car production. This put “used car prices up at more than a 170 percent annualized pace over the past two months,” according to Morgan Stanley.

Airfares were also up 7 percent, and rental car prices jumped another 12 percent last month.

Food prices rose 0.4 percent and energy prices remained flat in May. Analysts, however, expect a further increase in food prices in the coming months.

Core inflation, which excludes the volatile food and energy components, is up 3.8 percent over the past year—the largest gain in 28 years.

- Advertisement -

The sharp jump in the year-over-year inflation number is partially due to the base effect, as the pandemic lockdowns and the plunging economy caused weak consumer inflation a year ago. The base effect is expected to level off in June.

In March, the central bank raised its inflation projection for 2021 to 2.4 percent, up from the 1.8 percent projected earlier. Fed officials have repeatedly said price increases are “transitory,” with the expectation that inflation will eventually return to the central bank’s 2 percent target.

Recent inflation data, however, may require the Fed to revisit its inflation forecasts.

“The outsized gains in a few select sectors support the Fed’s view that the current degree of price pressures is temporary,” Sarah House, senior economist at Wells Fargo Securities, wrote in a report. “However, we see signs of inflationary pressures broadening out, which we believe will keep monthly price gains from merely falling back to their pre-pandemic trend after the current flurry of activity.”

Restaurants and groceries have started to raise their prices as they face increasing food and labor costs. Agricultural commodity prices surged about 60 percent over the past year, reaching a decade high, according to Wells Fargo. And average hourly earnings at restaurants have increased 24.4 percent at an annualized rate in the past three months, as business owners scramble to fill open job positions.

Ellen Zentner, chief U.S. economist at Morgan Stanley, said persistent inflationary pressure could be greater than expected this year.

“What was most notable in this report is that while transitory factors did a lot of the heavy lifting driving the May upside, the more persistent components like rents and OER [owner’s equivalent rent] firmed up as well much more than expected,” she wrote in a report.

OER, which is used to estimate shelter cost (a monthly rent that would be equivalent to the monthly expenses of owning a house), rose 0.31 percent in May, the largest increase since June 2019. And rents increased 0.24 percent, the largest since March 2020, according to Morgan Stanley.

“I think it’s going to be more persistent than transitory,” Joseph Carson, a former Alliance Bernstein and Commerce Department economist, told NTD TV.

“You have a lot of factors pushing it up, like…

Read entire article here.

Original article posted by Emel Akan at The Epoch Times. Title altered by Montana Daily Gazette.




A CALL TO ACTION:

Bringing you conservative news and commentary means it is tough out there on social media. We’re constantly getting kneecapped and constrained by tech companies who find the truth intolerable, resulting in our reach being severely throttled.

For this reason, please consider supporting us directly. If you like what you are reading and desire to to see more, please support our work here.


Stay informed. Subscribe today.
Enter your email address below.




Print Friendly, PDF & Email
- Advertisement -
HTML5 Icon

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest news

AZ AUDIT: AZ Senate Liaison Disputes Missing Ballot Claims

Spokespersons for the audit taking place in Arizona’s largest county are pushing back on a report that claimed auditors have discovered...

BUSTED!!! Election Steal Confirmed! Pennsylvania Results Show Statistically Impossible Results

On November 13, 2020, we reported the following which to date is STILL UNEXPLAINED by any election official in...

SCOTUS 9-0: Low-Level Crackheads Not Covered Under First Step Act

Low-level crack cocaine defendants are not included in the Trump-era First Step Act that reduced some prison sentences, the...

ELECTION FRAUD: Swing State Ballots Missing Required Chain of Custody Documents in Battleground States

Chain of custody documents are legally required for a ballot to be counted.  But in the 2020 election, this...

MT Gazette Publisher to Teach on “Critical Theory and Christ” in Billings on June 15

JD Hall, president of Gideon Knox Group and publisher of Montana Daily Gazette will be teaching on the topic...

Endorsement: Derek Skees for MT GOP Treasurer

This endorsement is not difficult for the Montana Daily Gazette. Just as we happily endorsed Lola Sheldon Galloway for...

Must read

MT Gazette Publisher to Teach on “Critical Theory and Christ” in Billings on June 15

JD Hall, president of Gideon Knox Group and publisher...

Endorsement: Derek Skees for MT GOP Treasurer

This endorsement is not difficult for the Montana Daily...

You might also likeRELATED
Recommended to you

Print Friendly, PDF & Email