US Consumer Prices Reaccelerate In May, Highest Since 1981

Having briefly slowed its inexorable rise in April – offering reawakened hope for the ‘transitory’ or ‘peak’ inflation camp – consumer prices were expected to continue accelerated in May (as energy costs soared). Consumer prices rose by a far larger than expected 1.0% MoM (significantly higher than the +0.3% MoM in April and the +0.7% Exp). That sent the YoY CPI to +8.6% – a new cycle high…

Source: Bloomberg

Headline CPI pushed to its highest since 1981 and has now risen for 24 straight months.

Core CPI offered no respite as it soars 6.0% YoY (worse than the +5.9% YoY exp)…

Source: Bloomberg

While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles. The indexes for medical care, household furnishings and operations, recreation, and apparel also increased in May.

Energy costs dominated the rise (the energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005)…

Source: Bloomberg

Amid the soaring food costs, Chicken, Eggs, Milk, and Cupcakes are screaming higher…

The picture is getting worse and the inflation is spreading (more red in the table below)…

The costs of putting a roof over your head is accelerating dramatically…

Shelter Inflation May 5.45%, up from 5.14% in April and the highest since 1991

Rent Inflation 5.22%, up from 4.82% in April and the highest on record

While the surge in goods costs is slowing (slowest since Sept 2021), the costs of services are accelerating, now at their fastest pace sine 1991…

Source: Bloomberg

MoM, Services and Energy contributed the most to the surprise shift…

YoY, Services, Food, and Energy all accelerated…

So, is this enough to force The Fed to falter? And will traders ‘buy the news’ anyway?

Finally, remember, always trust the officials…

INFLATION: President Biden says, “There’s nobody suggesting there’s unchecked inflation on the way, no serious economist.” pic.twitter.com/VofmVi4s8e

— Forbes (@Forbes) July 19, 2021

Worst of all, real average hourly earnings fell 3.0% YoY – meaning that the rise in the cost of shit you buy is outpacing the rise in your wages for 14th straight month…

This is bad news for the Fed, and definitely bad news for the White House.