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Gain in U.S. CPI Exceeds Forecasts, Fuels Inflation Concern

EconomyJun 10, 2021 14:05
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2/2 © Bloomberg. Shoppers wearing protective masks browse at an Amoeba Music store in Los Angeles. Photographer: Roger Kisby/Bloomberg 2/2

(Bloomberg) -- Prices paid by U.S. consumers rose in May by more than forecast, extending a months-long buildup in inflation that risks becoming more established as the economy strengthens.

The consumer price index climbed 0.6% from the prior month after a 0.8% jump in April that was the largest since 2009. Excluding the volatile food and energy components, the so-called core CPI rose by a larger-than-forecast 0.7%, according to Labor Department data Thursday.

The median forecast in a Bloomberg survey of economists called for 0.5% gains in both the overall CPI and the core.

Compared with the same month a year ago, the CPI jumped 5%, the largest annual gain since August 2008, though the figure remains distorted by the base effect. The comparison to the pandemic-depressed index in May 2020 makes year-over-year inflation appear stronger.

The core measure rose 3.8% from 12 months ago, the most since 1992.

Follow reaction in real-time here on Bloomberg’s TOPLive blog

Price pressures continue to build across the economy as businesses scramble to balance a rush of demand against shortages of materials and, in some cases, labor. Shipping bottlenecks, higher input costs and rising wages are challenges to companies looking to protect profit margins.

Strong consumer spending on merchandise -- in part driven by government stimulus -- has led to growing orders backlogs and lean inventories. The lifting of pandemic restrictions, increases in vaccinations and a flurry of social activity is translating into more services demand -- another propellant for inflation.

The question economists and investors are wrestling with is whether these factors will have a temporary impact on inflation as the Federal Reserve expects or whether they will become more ingrained against a backdrop of massive fiscal and monetary policy support.

©2021 Bloomberg L.P.

Gain in U.S. CPI Exceeds Forecasts, Fuels Inflation Concern
 

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Comments (4)
David Hawley
David Hawley Jun 10, 2021 21:40
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Of course prices will go up. Business's are trying to recover some money lost during the lockdown. But you cannot take one statistic out of 100's and translate the reading into a trend. CPI is measuring prices only..not spending. Of course spending will go up post lockdown, but people can only spend their money once. And if unemployment isn't falling very fast there's a lot of people not spending anything. This is just a short term surge then things will settle back to what they were.
David Hawley
David Hawley Jun 10, 2021 21:40
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Besides, I thought from these reports that inflation and the prospect of rising interest rates was bad for tech stocks. not so today
Arno Pfohl
Arno Pfohl Jun 10, 2021 15:15
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nonsense article. the inflation trend is lower. bloomberg, reuters, etc are non credible news sources...
Antony Magdalinidis
Antony Magdalinidis Jun 10, 2021 15:15
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Exactly. All the big financial news sources are trying to mess with us.
Drake Richards
Drake Richards Jun 10, 2021 14:48
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so we don't want the economy to recover then ?
MOSTAFA AJJOUJ
MOSTAFA AJJOUJ Jun 10, 2021 14:31
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mon agents chez vous ajjouj mostafa   je suis en 2020 EN 2021 AUTRE CHOSE
 
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