The Consumer Price Index (CPI) rose 5 percent in May, the fastest annual rate since August 2008, eclipsing the already high expectation for inflation.
Economists surveyed by Dow Jones predicted 4.7 percent inflation amid the economic recovery from the coronavirus pandemic, Fox Business reported.
CNBC reported that this is the highest increase since the 5.3 percent rise in August 2008, right before the U.S. economy was sent into the worst financial crisis since the Great Depression.
The CPI is a measure of the average change of what urban consumers pay for goods and products, according to the U.S. Bureau of Labor Statistics (BLS).
Core CPI, which excludes food and energy data, surged at 3.8 percent, the highest rate since 1992.
Because of the pandemic, some businesses have had trouble locating materials due to supply chain holdups causing an upward tick on consumer prices.
Fox Business also noted that unemployment benefits have incentivized many eligible workers staying home, making businesses short for workers.
This notable inflation comes before the Federal Open Market Committee policy meeting next week, where investors will be watching carefully.
Federal Reserve Chairman Jerome Powell assured that the upward trend will not be permanent.
Eric Wingorad, senior economist at Alliance Bernstein, joined Powell in dismissing that this high CPI rate is anything but temporary.
“The more persistent categories of inflation — the ones that do a better job of capturing the sustainable trend—are significantly more subdued,” Wingorad wrote, according to CNBC. “That means that the details of today’s print continue to support the idea that the spike in inflation is transitory, even if it is more intense than most forecasters (myself included) would originally have anticipated.”