Stocks in the U.S. made a sharp fall on Friday following a report of May inflation that came in at its highest level since 1981 and also beating economists’ forecasts by a large margin.
The May consumer price index for the U.S. accelerated by 8.6% year over year and 1.0% from April, crashing hopes that the rise in cost of living had peaked in the previous month. Meanwhile, core inflation, which excludes food and energy prices, only eased to 6.0% from 6.2%.
Economists were expecting a rise of 8.2% in April and 5.9% for the core index.
The Labor Department said on Friday that the surge in prices was “broad-based, with the indexes for shelter, gasoline, and food being the largest contributors.”
The energy index increased 34.6%in May, the largest 12-month rise since the period ending September 2005, according to the data from the Bureau. Meanwhile, the food index rose to 10.1%, the first time it has surpassed the 10% level since the period ending March 1981.
According to the data compiled by Refinitiv before the inflation data for May came out, the U.S. central bank is expected for another three to five rate hikes to a range of 2.5 – 2.75 percent by year-end.
The rising inflation and the unforeseeable ending of the Russia and Ukraine war could prompt the Federal Reserve for a much more aggressive move on its monetary policy.
As of 21:34 local time in Thailand, Dow Jones fell nearly 750 points or 2.32%. Meanwhile, S&P 500 dropped 2.58% and Nasdaq plunged 3.10%.
