Inflation hits highest annual rate since December 1981
Writing about the April inflation figures last month, I noted that “gas prices have been ticking up again recently… and this will be reflected in next month’s CPI numbers.” That has turned out to be the case.
Today, the Bureau of Labor Statistics (BLS) released figures for the Consumer Price Index (CPI) in May. Where last month saw good news with rates of increase slowing, this month it is all bad. The CPI:
…increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April…Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment [up from 8.5 percent in April].
This 8.6 percent rate is, the BLS notes:
…the largest 12-month increase since the period ending December 1981.
For the Midwest, the rate was 8.8 percent.
“The increase was broad-based,” the BLS reports:
…with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.
The index for fuel oil more than doubled, rising 106.7 percent; this represents the largest increase in the history of the series, which dates to 1935.
The food index increased 10.1 percent for the 12-months ending May, the first increase of 10 percent or more since the period ending March 1981.
This inflation is making Americans worse off, as I noted on Wednesday. The BLS also released data for real earnings today — that is, adjusted for inflation. It showed that:
Real average hourly earnings for all employees decreased 0.6 percent from April to May, seasonally adjusted…This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 1.0 percent in the Consumer Price Index for All Urban Consumers (CPI-U).
In short, hourly earning were up 0.3 percent, but prices were up 1.0 percent, leaving the worker worse off in real terms. Over the course of the year:
Real average hourly earnings decreased 3.0 percent, seasonally adjusted, from May 2021 to May 2022.
Remember this the next time someone tries telling you how well the economy is doing.