Key facts:
Food inflation was 10.1% and the energy category increased 35%.
Gasoline increased 48.7% and diesel 106% compared to May 2021.
US consumer prices rose 8.6% in May from a year ago, marking the highest inflation in more than four decades. The Consumer Price Index report, published this Friday, June 10, by the United States Bureau of Labor Statistics (BLS), highlights that the year-on-year increase recorded last month is the highest since December 1981.
While the general index for May was 8.6%, food increased 10.1% in the last 12 months and energy increased 34.6%. These two items were decisive in the record increase in inflation in May. In the energy category, gasoline increased 48.7% and diesel oil 106.7% in the month of May. The latter is the highest since the CPI’s monthly reports are published, the BLS noted.
The rest of the products and services, such as transportation, health and accommodation, increased 6%, says the report.
The monthly increase in inflation was 1% in May, compared to 0.3% in April. The consensus of analysts, compiled by Bloombergwas an increase of 8.3% for May, which led to the decline of the main stock indices, as well as the bitcoin market and cryptocurrencies.
The market reacts to US inflation
Taking into account that since this Thursday the markets had been evolving downwards, the shares recorded a greater decline in its price than the drop experienced by the price of bitcoin.
While the Nasdaq index fell 3.83% since this Thursday the 9th, bitcoin registers a decline of 2.04%. Its price, at the time of writing this article, is USD 29,680.
Since January this year, year-on-year inflation has been growing and setting successive records each month, although the increases have registered a notable rebound since 2020, mainly driven by the Covid-19 pandemic. In the chart, periods of recession are shaded in grey, the last of which was in 2008-2010.
The inflation registered in April of this year, of 8.3%, also registered a record, being the highest since 1941. The increases continued above market expectations contribute to increasing uncertainty about the economic outlook for the United States for the rest of 2022.
The measures of the Federal Reserve, regarding the increase in interest rates, do not seem to have had the desired effect in a significant reduction in inflation. In that sense, the financial outlook for crypto companies and assets in the remainder of the year does not look promising.