The May CPI numbers are out, and they don’t look good.

The CPI, or Consumer Price Index, tracks the increases in the price of a certain basket of commodities which economists take to be fairly representative of all goods in the economy. Thus, price increases in that basket serve as a pretty good approximation of overall price inflation.

According to new data from the Department of Labor which was just released on June 10, the CPI ticked up by 0.6% in May alone. This brings the total CPI increase for 2021 thus far to a whopping 5%, well over the already high 4.7% which economists interviewed by the Wall Street Journal had been predicting.

Moreover, core CPI — the CPI, minus a few especially volatile commodities, especially food items and energy — rose by an astonishing 0.7% in May. This follows on the heels of a 0.9% increase in April.

Inflation Fears Are Real: Could Stagflation Be Coming?

The economic logic explaining these recent price increases is very easy to follow. Following the COVID-19 outbreak, the American economy — and much of the world economy — was essentially shut down. Although some crucial industries have re-opened and some states have even returned to normal, much of the economy remains functioning below capacity to this day.

With fewer people at work in key industries, production plummets and crucial supply chains are disrupted. As a result, fewer goods of all kinds are being produced, and they become harder to find.

Thus, their prices rise.

Then, the Biden Administration passes a series of enormous spending bills, ostensibly to help tide people over while the economy is locked down. However, some believe the generous unemployment benefits in these spending packages have actually disincentivized people from returning to work.

Moreover, a great deal of unemployment money in various states was simply stolen or obtained fraudulently. In Washington, it is estimated that Nigerian hackers stole about $900 million. In California, the losses to unemployment fraud total about $32 billion.

This does not even begin to describe all of the spending in these bills that was unrelated to the virus. The bills have included everything from generous foreign aid provisions to bailouts for the pension funds of key unions.