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Summary
- Prices of used vehicles, airfares, hotel rooms, and apparels have gone up.
- It was the highest jump in prices since August 2008, when it was 5.4%.
- However, minus the energy and food prices, the core price index grew by 3.8% in May compared to the figures in the same period last year.
US consumer prices climbed by 5% in May, the highest spike recorded since August 2008, the Labor Department said on Thursday.
The US is currently experiencing high inflation in the midsts of economic recovery after the pandemic-induced downturn.
The Labor Department’s latest CPI data set comes as the Biden administration plans to pump more money into the economy that economists say could further escalate the price situation.
However, minus the energy and food prices, the core price index grew by 3.8% in May, compared to the figures in the same period last year.
Source: Pixabay:
Also read: US Adds 559,000 Jobs In May But Labor Recovery Far From Over
What Gets Costlier?
Prices of almost all consumer products have gone up, especially vehicles. Costs of used trucks and cars grew by 7.3% as compared to last month; it is one of the reasons why one-third of the index went up.
Prices of airfares, furniture, and apparels also have increased. In addition, costs of new vehicles increased due to computer chip shortage.
Rental car prices also went up because the the companies sold their vehicles when demand dwindled during the pandemic.
Aslo, hotel room and airfare rates have increased as more people started travelling after the pandemic restrictions eased.
Also read: How Biden Plans To Cut 50% Emissions By 2030
The department also said that unemployment benefits claims continue to decline. Meanwhile, stock markets appeared upbeat after the positive labor market data. They, however, seemed to have ignored the inflation worries.
Ease in business restrictions, covid vaccinations, and stimulus checks contributed to price rise in May as people wanted to spend and travel, say economists.
US Inflation Scenario
Prices rose at an annual rate of 9.7% over the three months ended in May. On a monthly basis, they went up by 0.6%, while core prices surged by 0.7%. The overall prices grew by 2.5% in May as compared to two years ago.
The annual figures look higher than pandemic prices, which were lower due to low demand and restrictions. This low base effect will cause inflation figures to look bigger in May and June before it falls, say experts.
Also read: US Oil Prices Soar As Summer Kicks In
