US consumer prices hit a new 40-year high after May’s Consumer Price Index (IPC) was released. After gasoline reached an all-time high and the cost of services continued to rise.

The foregoing indicates that the Federal Reserve (Fed) could continue with its increases of 50 basis points in interest rates until September, to fight against high inflation.

The IPC rose 1.0% last month after gaining 0.3% in April, the Labor Department reported Friday. Economists surveyed by Contador Financiero had estimated that the monthly IPC would increase by 0.7%. This is an increase of 8.6% over the previous year, the largest increase since December 1981.

Gasoline values ​​soared in May, averaging around $4.37 a gallon, according to AAA data. On Friday, gasoline was close to US$5 per gallon on Friday, which indicates that the monthly CPI would continue to rise in the month of June.

Inflation was also spurred last month by peak prices for other goods such as food, which soared after Russia’s war with Ukraine. China’s zero-Covid-19 policy, which has disrupted supply chains, is also seen as keeping commodity prices strong.

Prices for services such as rentals, hotel accommodation and air travel were also high last month. There was hope that the shift in spending from goods to services would help cool inflation. But a tight labor market is driving up wages, contributing to higher prices for services.

The inflation report was released ahead of a second anticipated 50 basis point rate hike by the Federal Reserve next Wednesday. The US central bank is expected to raise its interest rate by an additional half percentage point in July. The Fed has raised the overnight rate by 75 basis points since March.

“Resilient monthly inflation could suggest the Fed is guiding more explicitly that policy rates continue to rise by 50 basis points or more until actual inflation data convincingly accelerates.” Record gasoline prices and geopolitical factors threaten to keep inflation high in the coming months, suggesting the Fed will have to rein in the economy for longer.

In the 12 months to May, the IPC rose 8.6% after rising 8.3% in April. Economists believed that the annual rate of the IPC would peak in April.

Core inflation was similarly high last month as rents and airfares continued to rise.

Excluding volatile food and energy components, the IPC rose 0.6% after advancing by the same margin in April.

The so-called core IPC rose 6.0% in the 12 months to May. That followed a 6.2% rise in April. Inflation by all measures has far exceeded the Fed’s 2% target.

As a measure against the strong inflation that is currently experienced not only in the United States but worldwide, which has generated economic imbalances that are difficult to recover, such as high levels in the increase in gasoline, food, products, raw materials, services such as travel by plane, lodging, hotel rentals; which increased after the war in Ukraine and the Covid crisis. What it means in this scenario, the ways to transform the economies with IRAIC, as the only measure that achieves a change of traditional economic schemes for new ones that can represent improvements to the economic implementation systems in the markets and commercial processes through of strategies and mechanisms that exponentialize in a diversified way in the economic sectors generating greater results and economic development. Informed Contador Financiero, news and information agency.

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