The Consumer Price Index (CPI) in the United States registered an interannual rate of 8.6% in May, a record since December 1981, the Bureau of Labor Statistics (BLS) under the Department of Labor announced this Friday.
After slowing down to 8.3% in April and after the peak of 8.5% in March, the inflation index in the United States reached a new maximum, while the monthly comparison stood at 1%, seven tenths more than April and the highest percentage since June 2021.
Likewise, the figures exceeded all the estimates that foresaw an annual rise of the same range as that of April (8.3%) and 0.7% in the monthly.
The numbers are closely watched since greater price pressure could motivate the Federal Reserve -which will meet next week- to raise the interest rate more aggressively, than with the increases of 25 percentage points and 50 percentage points of interest. March and May, respectively, came to be in a range of between 0.75 and 1%.
Likewise,The numbers represent a problem for the aspirations of President Joe Biden in this year’s legislative elections, with inflation being one of the most questioned points in public opinion.
According to the BLS, the rise in the index in May was broad among all its components, leading the rises “accommodation, gasoline and food.”
After falling in April, the price index for Energy it rose again by 3.9% monthly (34.6% annual) with gasoline climbing 4.1% (48.7% annual).
The data on the price at the pump is consistent with the index prepared by the American Automobile Association (AAA), which indicated that in mid-May a gallon (3.7 liters) exceeded US$4 for the first time, marking today a new record when it reached US$4,986, almost US$2 more than a year ago.
In the case of fuel oil, a compound used as fuel in boilers, furnaces and power plants, the annual rise reaches 106.7%, an unprecedented rise since the series began in 1935.
Meanwhile, the foods They advanced 1.2%, a percentage that amounts to 10.1% per year, being the first time that they have risen more than 10% since 1981.
The monthly figure -of 1%- and the annual figure of 8.6% are reduced to 0.6% and 6%, respectively if only underlying inflation is considered, which does not take into account the volatile values of energy and food, although, however, they are also above forecast.
In this sense, in addition to food and energy, the estate (+1.3% monthly) with the highest increases in zero kilometer cars (+1.0% monthly, +12.6% annual), used cars (+1.8% monthly, 16.1% annual) and clothing (+0.7% monthly).
Similarly, there was a 0.8% increase in services, with the highest increases in plane tickets which rose 12.6%, a figure that climbs to 37.8% when compared to the same month last year.
The numbers represent a problem for the aspirations of President Joe Biden in this year’s legislative elections, with inflation being one of the most questioned points in public opinion
The demand contained by the coronavirus pandemic and the lack of workforce are two factors that explain the rise in services.
Also, the data indicates that the purchasing power of Americans eroded for the fourteenth consecutive month as the average hourly wage rose 5.2% annually, three points below inflation.
In the case of the United States, economists attribute price rise to strong post-pandemic demandwith an offer that is not enough to supply it.
That is why the FED will try to cool down the economy with successive rises in interest rates –which make credit more expensive-, of, for the moment, 50 basic points in the next meetings in June and July.
However, the markets are now betting that there will be a new rise of 50 points in September and even a rise of 75 points in some of the meetings is not ruled out.
The entity, from being too aggressive could lead to a recessionsomething that is seen among economists with increasing possibilities for next year.
“The Fed could raise rates next week by ‘only’ 50 basis points as in May, but could increase the pace further if inflation continues to surprise on the upside,” economist Sal Guatieri at BMO Capital Markets told Bloomberg.
Likewise, there is a possibility that “a peak in the annual index has not yet been reached” since it is expected that in the next report “the monthly number will continue at the same rate”according to economists Anna Wong and Andrew Husby.
According to economists Sarah House and Michael Pugliese of the Wells Fargo bank, monetary policy “will not help much” in the face of global rises in commodity prices.
As a consequence of the inflation data, this Friday the yields of the two-year Treasury bonds rose while Stock markets crashed on Wall Street thus heading for a new week in red with falls of 2.38% in the Dow Jones, 2.64% in the selective index S&P 500 and 3.12% in the technological Nasdaq.
Faced with fears of a potential recession, cyclical paper, banking and technology firms led the bleeding in the US stock market.
