Inflation in the US accelerated sharply in May, surpassing the 4% mark for the first time in three years, since spring 2023, in a development expected to intensify concerns in global markets and complicate the Federal Reserve’s planning on the path of interest rates.

According to official data released by the US Bureau of Labor Statistics, the consumer price index rose by 4.2% year-on-year in May, compared with 3.8% in April. On a monthly basis, the index increased by 0.5%, confirming analysts’ estimates and reflecting the strong pressures the market is facing from the energy rally.

Energy costs were the main driver of price increases, accounting for more than 60% of the total monthly rise in inflation. The energy index rose by 3.9% compared with April, continuing the upward streak of previous months, following a 3.8% increase in April and a 10.9% rise in March. On an annual basis, the energy index recorded a sharp increase of 23.5% compared with May of the previous year, reflecting geopolitical turmoil in the Middle East.

Core inflation, which excludes the volatile prices of food and energy and is closely monitored by the Fed, posted a modest monthly increase of 0.2%, compared with 0.4% in April. On an annual basis, it rose to 2.9%, from 2.8% the previous month.

Across individual categories, consumers faced increases in key areas of everyday life:

Shelter: This index, which carries significant weight, rose by 0.3% on a monthly basis, with rents up 0.4% and owners’ equivalent rent up 0.3%, while on an annual basis it is running at 3.4%.

Transportation and Travel: Airfares jumped by 2.7%, while lodging away from home rose by 0.4%.

Services and Goods: Significant increases were recorded in communications, up 1.3%, personal care products, up 1.0%, and apparel, up 0.3%. In health care, up 0.3%, hospital services rose by 0.7%, although prescription drug prices fell by 0.9%.

Food: The food index increased by 0.2% in May, with prices for food away from home rising by 0.3%, reaching 3.1% on an annual basis.

By contrast, falling prices in some categories acted as a buffer against broader inflationary pressures. The largest decline was recorded in motor vehicle insurance, which fell by 1.7%, following a 0.1% increase in April. Decreases were also recorded in household furnishings and operations, down 0.6%, as well as in new vehicle prices, down 0.3%, while used vehicles remained essentially unchanged, up 0.1%.

Source: newmoney.gr