Consumer prices surged far higher than economists expectations in the month of May.
In just one year, the Consumer Price Index rose a staggering five percent, the Department of Labor revealed in their report. Each month since Biden’s presidency the CPI rose 0.6 percent on a monthly basis. As a result, costs of many goods and services have doubled, even tripled for the American consumer.
Economists at the Labor Department predicted the rise, but never forecasted the 13-year record to break. Not since 2008, when Biden was vice president, has energy prices measured as high in one single month. The consensus amongst financial experts was for a 4.7 percent gain when measured against May of 2020, which would have been the hottest reading since skyrocketing energy prices rose in 2008, but the May 2021 blew past their expectations.
JUST IN: The Consumer Price Index jumped 5% over the last 12 months—the largest 12-month increase since August 2008. https://t.co/AwD4ewZwOC
— ABC News (@ABC) June 10, 2021
The reading for core inflation, which strips out volatile food and energy prices, was expected to rise 3.5 percent compared with a year ago. That would have been the strongest annual increase in 28 years. On a monthly basis, economists were expecting a 0.5 percent gain.
In Thursday’s release, the government said core inflation rose 0.7 percent. On an annual basis, core inflation jumped 3.8 percent. This was the hottest reading since June 1992.
The index for used cars and trucks continued to rise sharply, jumping 7.3 percent in May. Compared with a year ago, used car prices are up 29.7 percent.
Energy prices were flat, with a drop in gasoline prices offsetting increases in electricity and natural gas. Food prices rose 0.4 percent. The index for airfares rose 7 percent compared with April and is up 24.1 percent compared with a year ago.
We were warned that massive spending by the Admin would trigger inflation. In ONE year:
❌ Consumer Price Index ⬆️ by 5%
❌ Gasoline is ⬆️ 56.2%
❌ Transportation services ⬆️ 11.2%
❌ Food/energy prices ⬆️ 3.8%
Americans are losing and suffering under these numbers.
— Rep. Don Bacon (@RepDonBacon) June 10, 2021
Federal Reserve officials and Treasury Secretary Janet Yellen have said they expect this rapid rise in the cost of living to taper off later this year. The year-over-year numbers are boosted by what economists call a base effect, which simply means that the figures are based on gains over prices that were depressed by pandemic shutdowns. In a few months, however, the comparison will be against less depressed prices as the economy began to recover.
Analysts fear that inflation will continue to rise as government spending is expected to increase under Biden’s tutelage. The federal spending measures combined with very low interest rates will significantly increase the budget deficit, and prices for common goods and services will like stay on the rise.
This price increase comes as pent up American consumers demand good and services. With stimulus cash in hand and a new-found freedom from tyrannical COVID lockdown measures, the U.S. consumer is ready to stimulate the U.S. economy. However, with skyrocketing prices on common goods it’s become more difficult to justify certain purchases, completely contradicting the intention of stimulus payments.
Author: Elizabeth Tierney