The U.S. inflation rate reached 8.6 percent in May, its highest level since December 1981, the U.S. Department of Labor (DOL) reported on June 10, putting pressure on employers to raise wages to keep pace.
An unusually tight U.S. labor market, combined with spiking gas and food prices, are to blame for creating pricing pressures across the economy.
In April, the consumer price index (CPI) had ticked down to 8.3 percent year over year, off of a March high of 8.5 percent.
The long-term average inflation rate in the U.S. is around 3.2 percent, although consumers had grown used to more moderate annual price increases averaging 1.75 percent from 2010 to 2019.
The May CPI measure came in higher than consensus expectations that the annual rate would stay unchanged at 8.3 percent, indicating that “signs of inflation peaking in April were wrong,” according to The Kobeissi Letter, an industry commentary on global capital markets.
Tweeted Mohamed A. El-Erian, chief economic adviser at Allianz, “Amplifying the economic/social/political discomfort, [the CPI] headline is a new high for this inflation cycle. Also, if the first 10 days of June are anything to go by, the next monthly measure would be higher.”
This developing story will be updated shortly.