The costs of gas, food and most other goods and services jumped in May, raising inflation to a new four-decade high and giving American households no respite from rising costs.
Consumer prices surged 8.6% last month from 12 months earlier, faster than April’s year-over-year surge of 8.3%, the Labor Department said Friday. The new inflation figure, the biggest yearly increase since December 1981, will heighten pressure on the Federal Reserve to continue raising interest rates aggressively.
Some evidence in recent weeks had suggested that inflation might be moderating, particularly for long-lasting goods that were caught up in supply chain snarls and shortages last year. But that trend appeared to reverse itself in May, with used car prices rising 1.8% after having dropped for three straight months.
But with inflation raging hot, investors now increasingly expect a third half-point Fed hike in September. Those rate increases will mean sharply higher borrowing costs for consumers and businesses. Surging inflation has forced Rocky Harper of Tucson, Arizona, to start doing gig work for delivery companies, on top of his regular full-time job with a package delivery service. His main job pays $800 a week, he said, which “used to be really good money and is now just above dirt-poor.”
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