Record high gas prices and surging energy costs lifted U.S. inflation back to the highest levels in four decades last month, Commerce Department data indicated Friday.
U.S. inflation accelerated again last month, data from the Bureau of Labor Statistics indicated Friday, snuffing out bets that consumer price pressures are starting to peak in the world’s biggest economy.
The headline consumer price index for the month of May was estimated to have risen 8.65% from last year, up from the 8.3% pace recorded in April and well ahead of the Street consensus forecast of 8.3%. The May reading was the fastest since December of 1981.
On a monthly basis, inflation was up 1%, the BLS said, compared to the April increase of 0.3% and again topping the Street forecast of 0.7%.
So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.6% on the month, and 6% on the year, the report noted, with the both the annual and monthly reading coming in just ahead of the Street consensus forecast.
Peak inflation bets began to surface last month when the Fed’s preferred measure, the core PCE Price Index, eased from the highest levels in 1983 thanks in part to price declines for cars, clothes and services.
Stocks on Wall Street were active following the data release, with the Dow Jones Industrial Average last seen indicating a 250 point opening bell decline while the S&P 500 was priced for a 47 point slump
Benchmark 10-year U.S. Treasury bond yields rose 5 basis points to 3.073% following the data release while 2-year notes extended gains from the highest levels since 2018 to around 2.895%.
The US dollar index, which tracks the greenback against a basket of six global currencies, fell 0.34% from a near 20-year high to 103.577
The CME Group’s FedWatch tool is showing an 95% chance of a 50 basis point rate hike next week, but a 25% chance of the 75 basis point move in July.
The Atlanta Federal Reserve’s GDPNow forecasting tool, a real-time benchmark, suggests U.S. economic growth has now slowed to a 0.9% clip, following the -1.4% contraction estimate for the three months ending in March.