U.S. May CPI Expected to Hit Over Three-Year High, Consumer Confidence and Purchasing Power Continue to Erode

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

He stated, "It's been nearly five years since inflation was last at the Fed's target, and I think that has gradually eroded the collective psyche. That's one reason why people feel so bad about the economy." According to a recent CBS News poll, three-quarters of Americans say their incomes are not keeping up with inflation. Economists say the May CPI data shows that rising energy prices may be the main driver of persistent inflation.

Zandi noted that besides energy costs, economists will also be closely watching goods and service costs on Wednesday to assess how higher fuel prices are impacting the economy. He said, "It's not just the price of gasoline going up; diesel prices are also rising, which pushes up the cost of everything shipped by truck, from groceries to Amazon packages. It's now more expensive to fly, too, as airlines have passed on higher jet fuel costs to passengers." (Jinshi)