US inflation ticks up to 8.6% in May despite Fed's rate hikes

Washington, June 11

US consumer inflation in May surged 8.6 per cent from a year ago, indicating inflation remains elevated despite the Federal Reserve's rate hikes, the US Labor Department reported.

The consumer price index (CPI) in May rose 1 per cent from April after increasing 0.3 per cent in April, according to the department's Bureau of Labor Statistics (BLS).

The May CPI surged 8.6 per cent from 2021, a larger increase compared with the 8.3-per cent growth in April, marking the third straight month of inflation over 8 per cent. The March figure was 8.5 per cent.

The May CPI was the largest 12-month increase since the period ending December 1981. Headline CPI has remained over 6 per cent year-on-year since October 2021, Xinhua news agency reported.

Although price growth has started to show signs of easing, the latest data is a stark reminder that the Fed has a long way ahead as it aims to bring elevated inflation under control.

The central bank raised its target federal funds rate by a quarter percentage point from near zero in March, beginning its tightening cycle to curb the surging inflation. In May, the Fed increased the rate by half a percentage point and has signaled more half-point hikes going forward, stoking recession fears.

The so-called core CPI, which excludes food and energy, rose 0.6 per cent in May following a 0.6-per cent growth in April. Core CPI jumped 6 per cent over the last 12 months, after climbing 6.2 per cent in April.

The increase in prices was broad-based, with the indexes for shelter (which includes rents and homeownership costs), gasoline, and food being the largest contributors, according to the BLS report.

After declining in April, the energy index rose 3.9 per cent over the month with the gasoline index rising 4.1 per cent. The energy index rose 34.6 per cent over the last year, the largest 12-month increase since the period ending September 2005.

The food index, meanwhile, rose 1.2 per cent in May as the food at home index increased 1.4 per cent. The food index increased 10.1 per cent for the 12-months ending May, the first increase over 10 per cent since the period ending March 1981.