Inflation in the United States shows no sign of significantly abating, with consumer prices expected to rise 8.2 percent in May, as energy, food, housing, and health care costs continue to rise.
The US’s headline inflation rate hit a 40-year high in March after a double-digit rise in energy prices. The March consumer price index leaped 8.5 percent annually, the fastest pace since December 1981, according to the Labor Department. Gasoline prices rose 18.3 percent in March and accounted for more than half the overall rise in costs.
In April, however, the rate of price rise slowed; the CPI figure dropped to 8.3 percent, but remained near to a 40-year high.
Ahead of the CPI report on Friday night, economists estimate that the consumer price index will rise between 8.5 – 8.0 percent year-over-year in May, with the US inflation consensus projected at 8.2 percent, a slight drop from the previous month.
Nomura and Morgan Stanley both predicted that the US inflation rate will increase by 8.5 percent annually in May, the same as in March.
Credit Suisse, JPMorgan, and Goldman anticipated the CPI would increase by 8.3 percent in May, while SocGen and Stifel forecasted an increase of 8.0 percent.
Economists believe that the market has been intensely focused on whether inflation has peaked, as this will affect the Federal Reserve’s prospective rate-hiking.
According to a Reuters poll, the Fed is likely to raise the key interest rate three to five times in 2022, including one hike of 50 basis points (bps) in the second quarter, one to two hikes of 75 bps in the third quarter, and one to two hikes of 50 bps in the fourth quarter, bringing the policy rate to 2.5 – 2.75 percent by year-end.
US Treasury Secretary Janet Yellen said on Wednesday that the US recession is unlikely, but no drop in gasoline prices soon.
“I don’t think we’re (going to) have a recession. Consumer spending is very strong. Investment spending is solid. I expect growth to slow down,” Yellen said.