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Inflation Watch: US Consumers Hit By Further Price Hikes In May | Business and Economy News

In the United States, consumer prices rose 0.6% faster than expected in May, the US Bureau of Labor Statistics said on Thursday, causing US households to suffer even more after the increase of 0, 8% in April.

Soaring inflation is going around the world and the United States is feeling the pressure.

Consumer prices in the United States rose 0.6% faster than expected in May, the United States Bureau of Labor Statistics said Thursday, causing American households to suffer even more after the 0.8 increase % in April.

Rising inflation is a burden on consumers, especially low-wage earners, as it erodes their purchasing power and eats away more of their disposable income.

As COVID-19 vaccination rates rise, restrictions are relaxed and government stimulus payments lure consumers out of their pandemic hibernation, bottlenecks form in supply chains that are forcing businesses to shut down. scramble to cope with the sudden increase in demand.

All of this equates to inflation, but economists are divided over whether the price spikes will be temporary.

Policymakers at the US Federal Reserve believe that higher inflation will be temporary and that there is no need to raise interest rates to avoid an uncontrollable inflationary spiral.

“The price increases resulting from the reopening of the economy and the ongoing bottlenecks in the supply chain will keep the inflation rate high and persistent, as the imbalances between supply and demand are not resolved. that gradually, ”wrote Kathy Bostjancic, chief US economist for Oxford Economics clients. “While we share the Fed’s view that this is not the start of an upward inflationary spiral, we hope that inflation will remain consistently above 2% until 2022.”

Although prices are rising, many American workers are in a stronger position to demand higher wages.

U.S. job postings hit a record 9.3 million in April, as more than 7,300 U.S. employers reported their most optimistic hiring prospects since 2000, survey finds from the workforce solutions company ManpowerGroup.

With so many beggar jobs, workers have more leverage over potential employers than they have in recent years and many of them are looking for a raise in pay.

According to the Bureau of Labor Statistics, the average hourly wage of employees on private payrolls increased 15 cents in May to $ 30.33. This increase follows an increase of 21 cents in April.

Deeper dive

About a third of the consumer price surge in May was due to used cars and trucks, an industry where prices rose 7.3% last month.

Food prices, meanwhile, rose 0.4% in May, in line with the increase in April.

Energy prices remained unchanged, with lower oil prices offsetting peaks in electricity and natural gas.

Over the past 12 months, the overall consumer price index has risen 5 percent – the largest annual increase since 2008. The latest reading continues a trend that has seen the index rise every month since January .

Core inflation, which excludes more volatile food and energy prices, has also risen every month since the start of the year and climbed 0.7% last month after rising 0.9% in April. .

Core inflation has risen 3.8% in the past 12 months – the largest annual increase since June 1992.

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