Inflation in May: Heating not Cooling
The price index is 8.6% higher than it was a year ago
Anyone hoping for easing inflation pressures will be disappointed by the government report issued today, which showed the Consumer Price Index (CPI) continue its pace of 8.6% year-over-year inflation in May, the same record-setting pace it established two months ago.
I anticipated a steady 1.0 monthly inflation rate for the remainder of this year, though we cannot make accurate point predictions due to volatility. Oddly enough, May’s rate was exactly 1.0, making the year-over-year rate increase a full 8.6. Ominously, the long-rate inflation over 4 years remains on fire, rising to 16.2%, up from last month’s 15.4%. If the monthly surge continues, the United States of the 2020s will look a lot like the 1970s.
Components of the sky high CPI include high energy prices, as expected. This is a leading indicator, and will be reflected in all prices in the months ahead. What’s striking is how there are signs of inflation everywhere. The government writes, “While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles.” Anyone trying to buy a car or an airline ticket in 2022 can attest to the tight supply.
None of this is news to the American families struggling to make ends meet. They know this, too: It will get worst before it gets better.