The core CPI reading, which strips out volatile food and energy prices, posted a 6% increase over the same period, higher than at the level of the previous month. Both readings are among the largest price jumps consumers have seen since 1981.
And it’s not just energy that drives prices up. Food prices rose 10.1%, the first double-digit increase since 1981. The Shelter Index, which measures rents and other housing costs, posted a 5.5% increase, the largest increase in 12 months since 1991.
Used car prices are on the rise again, which has shown signs of abating with monthly declines over the past three months, driving up prices by 16.1% over the past 12 months. New car prices increased by 12.6% over the same period. A shortage of computer chips has curbed production at automakers, and this limited invention is responsible for the high prices.
Strong demand for air travel at the start of the summer travel season also pushed up airfares, which posted a one-month jump of 12.6% in May, the third consecutive month of more than 10% monthly increase. In the past 12 months, airfares are up 37.8% and travel fares in May are 21.7% higher than they were in May 2019, before the pandemic brought air travel demand to a near halt.
The high pace of inflation means that the Fed is sure to continue to raise interest rates aggressively when it meets next week.
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