May was the worst month for U.S. inflation since 1981


The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April. . . . Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment.

The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.

The index for all items less food and energy rose 0.6 percent in May, the same increase as in April. While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles. The indexes for medical care, household furnishings and operations, recreation, and apparel also increased in May.

May’s 8.6 percent inflation is the highest since December 1981, when inflation was 8.922 percent.

Mohamed El-Erian, who almost a year ago accurately forecast that elevated US inflation would be persistent, says it hasn’t peaked.

The closely followed bond-market strategist agrees with monthly consensus estimates for May’s consumer price index to be reported on Friday, but told Bloomberg Television’s The Open on Thursday that “what worries me is that the June month-on-month print will be worse than the May month-on-month print. Those who boldly said inflation has peaked and is coming down may have to change their minds.”

“It wouldn’t surprise me if we see a headline print higher than 8.5%,” though “not as early as next month,” said El-Erian, 63. “Because the drivers of inflation are broadening. At the headline level, energy prices are going up month-on-month quite dramatically. We see pressure on shelter and food. It’s way too early to say inflation has peaked.”

Oh, and this morning, after the May numbers were released, Mohamed El-Erian added that, “If the first 10 days of June are anything to go by, the next monthly measure would be higher.”

Meanwhile, at Your Local Gas Station . . .

GasBuddy says the national average price of gas in the U.S. surpassed $5 per gallon Tuesday for the first time ever; AAA says gas is averaging $4.98 per gallon nationwide, and the Energy Information Agency says the national average was $4.87 per gallon as of June 6. The EIA updates its national average once a week.

If you’re an incumbent who’s betting that abortion or gun control or the January 6 hearings will be a bigger issue in the November midterm elections than inflation and gas prices, you might as well start cleaning out your office now.

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