U.S. May CPI May Hit Highest in Over Three Years, Consumer Confidence and Purchasing Power Continue to Erode

Odaily Planet Daily News Economists expect that a key inflation indicator released on Wednesday will show that the U.S. consumer price increase in May hit a new high in over three years. 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 Iran war. 

He said, "It's been almost five years since inflation was last at the Fed'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 CBS News poll, three out of four Americans say their incomes have not kept up with inflation. Economists say that the May CPI data suggests rising energy prices may be a primary driver of persistent inflation.

Zandi noted that besides energy costs, economists will also focus on goods and service costs on Wednesday to assess how higher fuel prices are impacting the economy. He said: "It's not just gasoline prices going up, but also diesel prices, which pushes up the cost 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." (Jin Shi)