Inflation in the United States has suddenly surged to a fresh four-decade high of 8.6%.
The prices of gas, food and most other goods and services jumped in May, raising inflation to a new four-decade high and giving American households no respite from rising costs.
Consumer prices surged 8.6% last month from a year earlier, faster than April’s year-over-year increase of 8.3%, the Labor Department said Friday.
“The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors.”
The new inflation figure, the highest since 1981, will heighten pressure on the Federal Reserve to continue raising interest rates aggressively.
The all items index increased 8.6% for the 12 months ending May, the largest 12-month increase since the period ending December 1981.
The all items less food and energy index rose 6% over the last 12 months, according to Consumer Price Index May 2022. The energy index rose 34.6% over the last year, the largest 12-month increase since the period ending September 2005. The food index increased 10.1% for the 12-months ending May, the first increase of 10%t or more since the period ending March 1981, the report said.
Central banks around the world are increasing rates in an attempt to combat unrelenting inflationary pressures.
The Organization for Economic Co-operation and Development (OECD) has warned that the world economy will pay a “hefty price” for the war in Ukraine encompassing weaker growth, stronger inflation and potentially long-lasting damage to supply chains.
The OECD’s latest Economic Outlook projects global growth to decelerate sharply to around 3% this year and 2.8% in 2023, well below the recovery projected last December.
“High inflation is eroding household incomes and spending, hitting vulnerable households particularly hard. The risk of a serious food crisis remains acute for the world’s poorest economies because of the high risk of supply shortages and elevated costs” the OECD added.