US Inflation Jumps to 8.6% in May, Highest Rate Since 1981

An ABC News/IPSOS poll last week found that 80 percent of Americans considered inflation an "extremely" or "very important" issue in determining how they would vote in the November midterm elections. Inflation began ticking up sharply in 2021, and has topped an average of six percent per month since October.

US inflation hit an annualised rate of 8.6 percent in May, Department of Labour data released on Friday have shown. The figures are the worst showing since any time since December 1981.

The agency indicated that the jump in the Consumer Price Index - a basket of goods and services whose prices are measured meticulously, increased most dramatically for energy, which surged 34.6 percent over the year, and food, which jumped 10.1 percent. "Core inflation", which includes all items except energy and food, jumped six percent over the year, according to the government.

The Biden administration had earlier hoped that April's annualised inflation rate of 8.3 percent would be the peak of the current inflationary spiral, with administration-friendly economists expecting a CPI rise of of 8.2 percent for May. The Department of Labour's figures surpassed these expectations by 0.4 percent.

US officials and media have blamed factors ranging from the pandemic to Vladimir Putin to explain the inflation surge, with the White House dismissing the idea expressed by some fiscal conservatives that the policy of injecting trillions of new dollars into the economy on COVID stimulus and President Joe Biden's ambitious infrastructure spending plan may have played a major role in sparking the current crisis.

Last week, Peter Schiff, a US economist who predicted the 2008 financial crisis, suggested that the only way authorities could effectively rein in inflation would be to raise interest rates to the same double digit rates they reached in the early 1980s. Schiff warned, however, that doing so would likely wipe out the US housing market and plunge the country into a steep recession, and said that US fiscal and monetary authorities had effectively driven themselves into a corner via decades of reckless quantitative easing and adding to the US national debt, which currently stands at over $30.5 trillion.

The United States is not alone in suffering from unusually high levels of inflation in recent months. Last month, the United Kingdom reported a CPI rise of nine percent for April. The European Union reported expectations for euro area inflation to reach 8.1 percent in May. Brazil's inflation rate reached 11.73 percent the same month. Russia reported an annual CPI rise of 17.1 percent in May.