The US inflation accelerated to 2.8% yoy in May, compared with 2.5% in April, surpassing market expectations of 2.7%. This is the highest level of inflation since February 2012. Gasoline and rental costs are the basis for price increases during the current month and the previous month.
On a monthly basis, consumer prices grew by 0.2%, thus keeping their pace of growth in April and coinciding fully with the consensus forecast.
The core Consumer Price Index (CPI), which measures inflation without food and energy, grew by 2.2% in the 12 months ending in May. The food index grows by 1.2% and the energy index – by 11.7%.
Latest US economic data boosts the outlook for interest rate hike of the Federal Reserve this week, and if this happens, the markets will witness the sixth interest rate hike for the past 18 months.
According to the analysts, the data provide further evidence that inflation is moving towards the Fed’s goal, and that the central bank will continue with a gradual increase in interest rates.
Meanwhile, however, it became clear that higher prices put pressure on consumers as the average hourly wage, adjusted for inflation, did not change in May compared with the same month of the previous year. For workers in the manufacturing sector, the wages even declined by 0.1% on an annual basis. The unemployment in the US declined to 3.8% in May, reaching its lowest level in 48 years, which is close to the central bank’s full employment target.