The consumer price index in the US rose by 8.6 percent in May, which exceeded the market’s estimate of 8.3 percent. The increase in prices was mainly due to the rise in food and energy costs. Other key drivers of inflation such as housing and transportation also show no signs of slowing down.
The consumer price index rose by 6 percent in May, which was higher than the 5 percent expected by economists. Food and energy prices were the main drivers of the inflation rate, with both rising by over 10 percent. In addition, the cost of gasoline and electricity increased by 48.7 percent and 12 percent, respectively.
Meat prices were the highest in May, with increases of over 10 percent for chicken, pork, and beef. Other food items also contributed to the inflation rate, with eggs, milk, and fruits and vegetables all rising by more than 15 percent. Shelter costs also increased by 5.5 percent. Airline ticket prices also rose by over 37 percent due to the high demand for fuel and the rising cost of gasoline.
In addition, the cost of new vehicles increased by 13.6 percent in May. On the other hand, used cars and trucks rose by 16.3 percent, and apparel prices increased by 5 percent. The stock market’s reaction to the inflation data was negative, with the Dow Jones Industrial Average dropping 700 points, the S&P 500 falling by 2.7 percent, and the Nasdaq composite index dropping by 3.3 percent. The yield on the two-year Treasury note also rose by 17 basis points to reach its highest level since June 2008.
According to Ed Yardeni, the president of Yardeni Research, the increase in the inflation rate is a signal that investors expect the Federal Reserve to raise its key interest rate by another 200 basis points in the next 12 months. The 10-year yield also remained around 3.10 percent, which Yardeni said suggests that the yield curve is pricing in a significant economic slowdown.
The dollar index, which measures the value of the US dollar against a basket of currencies, rose by 0.8 percent to 104.02. One of the most important factors that investors are looking for in inflation is whether or not it has peaked. During the past couple of months, some of the components of the US economy have started to show signs of moderation, such as used car prices.
Despite the various indicators indicating that inflation is starting to moderate, the consumer price index still remains higher due to the high prices that are being experienced by various goods and services. One of the most important factors that investors are looking for in inflation is whether or not it has peaked. According to Mohamed El-Erian, a top economist at Allianz, he is not expecting inflation to reach a peak.
He noted on Friday that the June consumer price index could be worse than the previous month’s report. He also said that the increase in the headline inflation rate could signal the start of a new high for the inflation rate.
He also noted that the bond market’s reaction to the inflation data could indicate that the Fed is preparing for a more aggressive response to the economy. In the past month, the prices of oil and gas have increased significantly. The national average price of gasoline has been around $5.50, while the price of diesel has been hovering around $6.
According to Ipek Ozkardeskaya, an analyst at Swissquote Bank, the rise in energy prices will need to be contained in order for inflation to ease. She said that the price of oil should be lowered to support the economy. Peter Schiff, a senior economist at Euro Pacific Capital, also noted that inflation is expected to get worse.
Although inflation has been around for a long time, it has finally reached the consumer goods sector. Some policymakers are waiting for more data to determine if the economy has started to feel the impact of higher prices.
One of the officials who is not expecting inflation to peak is Federal Reserve Bank of Cleveland President Loretta Mester. According to her, she does not believe that inflation has peaked. She said that she needs to see more evidence that the Fed’s actions are starting to show results.
After the Fed’s June policy meeting, it is widely expected that the central bank will raise its key interest rate by 50 basis points. According to the CME Group’s FedWatch tool, it is currently priced in at around a 60 percent chance of a rate hike. On Wednesday, Janet Yellen, the US Treasury Secretary, acknowledged that inflation in the country is still high. However, she noted that she is still hopeful that it will eventually come down.
During her testimony before the House Ways and Means Committee, she also acknowledged that she could have used a better term for inflation when talking about the current situation.