US inflation returns to its forty-year highs after a brief “cooling” according to the latest publication of Bureau of Labor Statistics. The consumer price index (CPI) in May grew 8.6% yoy and 1% yoy, well above expectations of 8.3% and 0.7% respectively.
L’core indexnet of energy and food goods for the month of May marks + 6% also here slightly above the estimates of 5.9% and on a monthly basis instead increases by 0.6% compared to the 0.5% forecasts of analysts .
The price hike in May meant workers suffered another pay cut during the month. THE real wages, taking inflation into account, fell by 0.6%even if the average hourly wage has increased by 0,3%, according to the BLS report. On a 12-month basis, real average hourly wages fell by 3%. On a yearly basis, the real average hourly wage has fallen of 3%.
Wall Street reacts badly
Wall Street down sharply in the last session of the week the index Dow Jones cede 660 points, the Nasdaq Composite scores -3% while the S&P 500 loses 2.5%.
There was also a reaction from the bond market, the 10-year Treasury yield rose to 3,13% while the Tresury with a maturity of 30 years travels on 3,21%.
“It’s hard to look at the May inflation data and not be disappointed,” he has declared john leather, Chief Economist of Morning Consult. “We are simply not yet seeing any signs that the worst is behind us. “
Rising energy and housing prices push US inflation to its highest level since 1981
Rising prices for shelters, gasoline and food have contributed significantly to the general rise in prices.
Energy prices have greatly increased by 3,9% compared to a month ago, compared to a year ago instead increase by 34,6%. The price of the fuel marks a monthly increase of 16,9%pushing the year-on-year surge to 106,7%.
I housing costs which account for about one third of the CPI weighting, have risen by 0,6% for the month, the fastest monthly increase since March 2004. The 5,5% are 12 months is the maximum since February 1991.
Finally, the costs food have increased by another 1,2% in May, bringing the percentage year-over-year to 10,1%.
“The month of May is one cold shower for the Fed, which expected possible signs of stabilization and a possible slowdown in the monthly price dynamics during the summer. Our forecast for now is that core monthly dynamics will remain, at best, between 0.4% and 0.5% mom over the next couple of quarters on average. The spread and magnitude of May hikes make significant inflation cooling unlikely by September and reinforces our forecast that monetary policy enters restrictive territory to bring price dynamics under control. In our opinion, the sequence of 50bp hikes will probably have to extend beyond June and July: Powell’s press conference will have to maintain hawkish tones to signal a commitment to bring inflation back under control “, underline the analysts of Intesa Sanpaolo.