Inflation in the United States rose 8.6% in May from a year prior, the highest rate in four decades, according to a report released Friday.
The Consumer Price Index for all products rose 1% in May from the month before, driven by rising prices of food, gasoline and shelter, according to the Bureau of Labor Statistics. Core inflation, which removes volatile items like food and fuel prices, remained steady at 6%.
America’s rampant inflation is imposing severe pressures on families, forcing them to pay much more for food, gas and rent and reducing their ability to afford discretionary items, from haircuts to electronics. Lower-income and Black and Hispanic Americans, in particular, are struggling because, on average, a larger proportion of their income is consumed by necessities.
Economists do expect inflation to ease this year, though not by very much. Some analysts have forecast that the inflation gauge the government reported Friday — the consumer price index — may drop below 7% by year’s end. In March, the year-over-year CPI reached 8.5%, the highest such rate since 1982.
High inflation has also forced the Federal Reserve into what will likely be the fastest series of interest rate hikes in three decades. By raising borrowing costs aggressively, the Fed hopes to cool spending and growth enough to curb inflation without tipping the economy into a recession. For the central bank, it will be a difficult balancing act.
Goods prices are expected to fall in the coming months. Many large retailers, including Target, Walmart and Macy’s, have reported that they’re now stuck with too much of the patio furniture, electronics and other goods that they ordered when those items were in heavier demand and will have to discount them.
Even so, rising gas prices are eroding the finances of millions of Americans. Prices at the pump are averaging nearly $5 a gallon nationally and edging closer to the inflation-adjusted record of about $5.40 reached in 2008.
Rampant inflation has posed a challenge to the Biden administration and Congressional Democrats, who are facing criticism from Republican opponents looking to retake the House and Senate in November, despite a robust jobs recovery from the COVID-19 pandemic.
The White House has blamed inflation on disruptions caused by Russia’s invasion of Ukraine and recovery from the pandemic, while Republicans blame Democrats’ spending plans, including the president’s COVID-19 relief bill.
Surveys show that Americans see high inflation as the nation’s top problem, and most disapprove of President Joe Biden’s handling of the economy.
President Joe Biden on Friday will deliver remarks on inflation and actions his administration has taken to address supply chain issues and lower costs during a visit to the Port of Los Angeles.
“The President will note that inflation is a global challenge, and the U.S. is the country best positioned to tackle this challenge from a position of strength,” a White House official said. “This is thanks to the President’s economic policies which have: helped the labor market recover at historic rates following the onset of COVID-19; brought unemployment rates to historic lows; resulted in families carrying less debt and having more savings; cut the deficit by $1.7T this year — the largest decline in history.”
Biden will also “underscore how one of the key ways to fight inflation is by lowering the cost of moving goods through supply chains” and tout his administration’s efforts to address baclogs at the nation’s biggest ports, the official added.
