U.S. May CPI may hit a new high in over three years, continuing to erode consumer confidence and purchasing power

Odaily Planet Daily News Economists expect a key inflation indicator released on Wednesday to show that U.S. consumer prices rose at the fastest pace in over three years in May. Mark Zandi, chief economist at Moody's Analytics, said that unlike the inflation triggered by supply disruptions during the COVID-19 crisis, the recent wave of price increases is mainly attributed to government policies, including the war in Iran. 

He said, "It has been nearly five years since inflation last reached the Federal Reserve's target, and I think this has gradually eroded the collective psyche, which is one of the reasons people feel so bad about the economy." According to a recent poll by CBS News, three-quarters of Americans say their incomes have not kept pace with inflation. Economists say the May CPI data shows that rising energy prices may be the main cause of persistent inflation.

Zandi said that in addition to energy costs, economists on Wednesday will also focus on the costs of goods and services to assess how higher fuel prices are impacting the economy. He said: "It's not just gasoline prices that are rising; diesel prices are also rising, which pushes up the prices of everything shipped by truck, from groceries to Amazon packages. It's also more expensive to fly now because airlines have passed on higher jet fuel costs to passengers." (Jinshi)