According to a new report released by the Department of Labor, consumer prices increased by a whopping 5.4 percent for the year ending in May, which as you know, is not at all a good thing.
Forecasters had predicted that inflation would increase by 4.9 percent, so the massive increase we got instead is horrible news.
This, according to the report, is the highest inflation rate since 2008.
“The outsized jump in June CPI continues to be driven by the same factors as the past few months,” Bankrate’s chief financial analyst Greg McBride explained. “Used car and truck prices had the biggest one month increase in history, 10.5%, and are up 45% from one year ago.”
The news comes as inflation fears percolate among some economists who worry that the rising prices are not just transitory, as the Federal Reserve contends, but might cause economic damage.
The central bank has maintained a controversially loose monetary policy and has vowed to keep interest rates near zero despite a glut in consumer demand as the United States emerges from the COVID-19 pandemic. The federal government has also infused trillions into the economy in order to stimulate spending, further prompting concerns of too-high inflationary pressures.
“The ‘inflation is transitory’ argument is starting to wobble,” McBride went on to say in a statement.
Last month, St. Louis Federal Reserve Bank President James Bullard spooked the markets when he predicted an interest rate hike in late 2022, earlier than the central bank consensus. He also said that inflation was running hotter than initially expected.
The Fed also acknowledged in June that inflation was increasing by going forward and raising its end-of-year projection from the original 2.4 percent predicted up to 3.4 percent. However, it still says that the boost will only be temporary, dropping back down to 2.1 percent by 2022 and then remaining steady at the central bank’s 2 percent goal for the long term.
JPMorgan Chase CEO Jamie Dimon recently warned that there is a decent chance that inflation might be more than transitory and said that his bank has been “effectively stockpiling” cash in case the Fed needs to hike rates in response to inflationary concerns.