The Bureau of Labor Statistics reported Friday that inflation accelerated further in May, with prices rising 8.6 percent from a year ago, the fastest increase since December 1981.
The consumer price index, a broad measure of goods and services prices, rose more than the 8.3 percent predicted by the Dow Jones. Excluding volatile food and energy prices, core CPI increased by 6%, slightly higher than the 5.9% estimate.
On a monthly basis, headline CPI increased by 1%, while core CPI increased by 0.6 percent, compared to estimates of 0.7 and 0.5 percent.
Rising housing, gasoline, and food prices all contributed to the rise.
Energy prices rose 3.9 percent month over month, bringing the annual gain to 34.6 percent. Fuel oil gained 16.9 percent month over month, bringing the 12-month gain to 106.7 percent.
Shelter costs, which account for roughly one-third of the CPI, increased 0.6 percent in the month, the fastest one-month increase since March 2004. The 5.5 percent year-on-year increase is the highest since February 1991.Finally, food prices increased by 1.2 percent in May, bringing the year-over-year increase to 10.1 percent.
Because of the rising cost of living, employees had to take another pay cut this month. According to a separate BLS release, real wages fell 0.6 percent in April after accounting for inflation, despite an increase in average hourly earnings of 0.3 percent. Real average hourly earnings were down 3 percent year on year.
Markets reacted negatively to the report, with stock futures pointing to a lower opening on Wall Street and government bond yields rising.
