Economists Sound the Alarm Over Rapidly Increasing Inflation
The monthly inflation rate continues to rise at record speed, raising the alarm in many economic circles. What does this mean for the economy overall?
Details of Report
According to new data released on Thursday by the Department of Labor, the Consumer Price Index (CPI) grew 0.6% in May. This brings the annual rate of CPI increase to 5%. This figure is over the 4.7% that many leading economists had forecast.
In addition, the Core CPI increased 0.7% in May compared to a 0.9% boost in April. This statistic measures consumer good prices minus the more fluid measurements of food and energy prices.
May’s CPI jump is the biggest 12-month increase since August of 2008. The core CPI 12-month increase of 3.8% is the largest since June 1992.
What is most concerning about these numbers is that financial experts are uncertain when inflation will slow. Part of the impetus behind the quickly rising inflation is that demand for goods continues to grow as the pandemic eases, sending prices soaring. With so much uncertainty still surrounding the pandemic in the coming months, it is challenging for economic forecasters to predict when the inflation rates will begin to moderate.
Job Growth Also Slows
Compounding the worries of the latest inflation data is last week’s report that demonstrated another anemic month for job growth.
May’s data reported a job growth of only 559,000 positions, missing the expected growth by over 100,000 jobs. While the unemployment rate dropped from 6.1% to 5.8%, it was also still short of expectations.