US inflation hit a new 40-year high last month of 8.6%

Is there a recession risk? Of course there’s a recession risk...but i it likely? I don’t think so. JANET YELLEN, US treasury secretar during an intervie

WASHINGTON: The prices of gas, food and most other goods and services jumped in May, raising inflation to a new four-decade high and giving American households no respite from rising costs.

Consumer prices surged 8.6% last month from 12 months earlier, faster than April’s yearover-year increase of 8.3%, the labour department said on Friday. The new inflation figure, the biggest yearly increase since December 1981, will heighten pressure on the Federal Reserve to continue raising interest rates aggressively.

On a month-to-month basis, prices jumped 1% from April to May, much faster than the 0.3% increase from March to April. Behind that surge were much higher prices for food, energy, rent, airline tickets and new and used cars.

The widespread price increases also elevated so-called “core” inflation, a measure that excludes volatile food and energy prices. In May, core prices jumped a sharp 0.6% for a second straight month and are now 6% above where they were a year ago.

Friday’s report underscored the worry that inflation is broadening well beyond the spike in energy prices stemming from clogged supply chains and Russia’s invasion of Ukraine.

And the increased pressure on the Fed to raises rates even faster — which will mean higher-cost loans for consumers and businesses — raises the risk of recession.

“Virtually every sector has higher-than-normal inflation,” said Ethan Harris, head of global economic research at Bank of America. Gas prices jumped 4% just in May and have soared nearly 50% from a year ago. They’ve risen further this month. The national average price at the pump reached $4.99 Friday, according to AAA.

The cost of groceries surged nearly 12% last month from a year earlier, the biggest such increase since 1979. Restaurant prices jumped 7.4% in the past year, the largest 12-month gain since November 1981.

Housing costs are also climbing. The government’s shelter index, which includes rents, hotel rates and a measure of what it costs to own a home, increased 5.5% in the past year, the most since 1991. Airline fares have skyrocketed nearly 38% in the past year, the sharpest such rise since 1980.

America’s rampant inflation is imposing severe pressures on families, forcing them to pay much more for food, gas and rent and reducing their ability to afford discretionary items, from haircuts to electronics.