Washington — American consumers absorbed another surge in prices in May — up 0.6% in April and up 5% over the past year. This is the largest 12-month inflation spike since 2008.
The May consumer price index, reported Thursday by the Ministry of Labor, includes a variety of commodities that are currently in high demand as people increasingly participate in shopping, travel, eating out and entertainment events in a rapidly resuming economy. It reflects the service.
Growing consumer demand has hit a shortage of parts that supply key products such as automobiles and computer equipment, from wood and steel to chemicals and semiconductors, all of which are pushing up prices. Also, as consumers move away from home, demand extends from manufactured goods to services, such as restaurant meals and hotel prices, as well as airfares, which are driving inflation in these regions.
Core inflation, excluding volatile energy and food costs, rose 0.9% in April, 0.7% in May, and 3.8% over the past year, the government said in a Thursday report. Stated. This is the 12-month sharp rise in core inflation since 1992. And it’s well above the Fed’s annual price increase target of 2%.
Among certain items in May, the price of used cars, which surged 10% to a record high in April, rose another 7.3%, accounting for one-third of the overall price increase in May. New car prices have also risen 1.6%. This is the largest monthly rise since 2009.
Soaring prices for new and used cars reflect supply chain problems that have caused semiconductor shortages. A shortage of computer chips has restricted the production of new cars, resulting in a reduction in the supply of used cars. As the demand for vehicles grows, so does the price.
However, prices have risen in various categories in May. This includes household furniture, which rose 0.9% due to record highs in flooring prices. Airfares rose 7% after rising 10.2% in April. Food prices rose 0.4% and beef prices rose 2.3%. Energy costs have remained the same in May, but have increased by 56.2% over the past year.
From cereal maker General Mills to Chipotle Mexican Grill to paint maker Sherwin-Williams, companies are raising or planning to raise prices. Worker. For example, this week Chipotle Mexican Grill announced that it would raise the price of its menu by about 4% to cover the cost of raising workers’ wages. In May, Chipotle announced that it would raise the wages of restaurant workers to an average of $ 15 per hour by the end of June.
Andrew Hunter, senior US economist at Capital Economics, said the price category covering restaurant meals rose 0.6% last month. He saw it as evidence that labor shortages in restaurants, hotels and other service sector companies are beginning to drive higher wages and prices.
Inflationary pressure not only puts pressure on consumers, but also poses a risk to the economic recovery from the pandemic recession. One of the risks is that the Fed will eventually respond aggressively to rising interest rates in response to rising inflation and hinder economic recovery.
The central bank, led by Chair Jerome Powell, repeatedly believes that inflation will be temporary as supply bottlenecks are eliminated and parts and commodities flow again. However, some economists have expressed concern that inflation will accelerate as the economic recovery accelerates, boosted by rising demand from consumers who are free to spend again.
How long is the problem?
Mark Zandi, Chief Economist at Moody’s Analytics, said: But “by the fall or end of the year,” Zandy suggested that “price will return to Earth.”
For consumers like Carmela Romanello Schaden, a real estate agent at Rockville Center, NY, that doesn’t end soon. Scheden said he had to pay more for various products at the hair salon. But she feels the most painful in Food Isle. According to her, her weekly meals are now between $ 200 and $ 250 for herself and her 25-year-old son, up from $ 175 earlier this year.
The strip steak package that Shaden usually bought for $ 28 to $ 32 jumped to $ 45. She noticed an increase shortly before Memorial Day, but bought it anyway because it was for a family picnic. But she said she wouldn’t buy it again at that price, trading down to pork and chicken.
“I was always selective,” Schaden said. “When something goes up, I switch to another.”
So far, federal officials say rising inflation is a temporary result of accelerated consumer demand and a rapid resumption of the economy with a shortage of supply and workers to keep up. It does not deviate from their view. Ultimately, they say supply will increase to meet demand.
Regular guests will be assisted on April 16 while dining along the sidewalk of Franklin Street in Chapel Hill, North Carolina. area.
U.S. consumers feel oppressive
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