Consumer Prices Rise at Fastest Pace in 13 Years
The Consumer Price Index, a measure of price changes commonly referred to as the inflation rate, has been trending up every month since January, and recently hit a 13-year peak. Prices increased 5% during the year-ending May 2021, according to data from the Bureau of Labor Statistics. The last time inflation was so high was in July 2008, when prices rose 5.6% year-over-year. That’s when the cost of oil topped a record $150 per barrel. The recent rapid increase in inflation reflected a surge in demand and shortages in materials and labor. Much of the recent inflation rate was attributed to energy commodities, such as gasoline and fuel oil, which recorded a year-over-year hike of 54.5% in May. When removing the volatile energy prices from the equation, inflation measured 3.5%, still the sharpest increase in three decades. Surging used car prices also helped drive much of the inflation gains over the past year, as the price of used cars and trucks were up 29.7% in the year-ending May, a 46-year high. Officials at the Federal Reserve System believe the current price hikes are due to temporary factors as well as year-ago comparisons when economic activity was constrained due to the pandemic.