Data released on Thursday showed the Consumer Price Index in the US rose 0.6% in May and 5.0% year-over-year. Analysts at Wells Fargo, point out a handful of categories most closely tied to the reopening of the service sector and supply bottlenecks once again accounted for an outsized share of the rise.
“Consumer price inflation continued to tear higher in May, with prices up 0.6%. Over the past three months, prices are up at a 8.5% annualized rate and illustrate that the jump in the year-ago rate of inflation is being driven by more than easy base comparisons after last spring's lockdowns. Headline CPI is up 5.0% over the past year, while core inflation, which excludes what is usually the most volatile components—food and energy, is up 3.8%. That's the largest one-year gain in 28 years.”
“But similar to April, much of May's increase in prices can be traced to a handful of small components currently at the center of reopenings and supply shortages.”
“We expect headline CPI to run over 4% on a year-ago basis between now and the first quarter of next year. Tougher base comparisons after this spring's leap along with easing bottlenecks as demand cools and supply chains adjust should lead to a slowdown beginning in the second quarter of next year.”
“The recent onslaught of consumer price inflation and strengthening wage gains will likely push the FOMC to “talk about talking about” tapering at its meeting next week. But that doesn't mean plans to scale back asset purchases are imminent. Given the unique factors currently driving up inflation, we believe the Fed still wants a clearer view on how the dust will settle—or will not settle—on inflation later this year, and see the recovery in payrolls move further along.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.