Friday’s inflation report was a triple blow to consumers, with massive price hikes in food, shelter and energy – sectors that make up the bulk of household spending – as in almost every other category.
But some of the strongest increases were in the home food sector, where food spending rose nearly 12 percent in the year to May. This is the largest increase on an annual basis since 1979.
The categories that experience the biggest jump in prices are usually the main dishes: dairy products, eggs and meat.
The price of eggs increased by 32.2% from May 2021 to May 2022, according to the latest CPI. Meat, poultry and fish grew by 14.2% year on year, while dairy products jumped 11.8%.
“Food and fuel are boosting inflation and creating sore spots for US households,” said Joe Bruswell, chief economist at RSM, in a note Friday.
As 70% of the US economy is driven by consumers, economists are closely monitoring changes in behavior. The latest monthly survey of consumer sentiment by the University of Michigan found that confidence in the economic outlook fell in early June to its lowest level in history.
“We need to listen to what consumers are saying, but more importantly, we need to watch what consumers are doing,” said Jeffrey Roach, chief economist at LPL Financial.
“We expect a slowdown in consumer spending as inflation and uncertainty weigh heavily on sentiment,” he said in a statement.
The Federal Reserve, tasked with a dual mandate to maintain price stability and maximum employment, is raising interest rates as a way to mitigate rising inflation and cool the economy, but this is far from an overnight process.
While the inflation report brought new attacks on the Biden administration by Republicans, the White House tried to blame the worst inflation on rising oil and gasoline prices after Russia invaded Ukraine.
“Today’s inflation report confirms what Americans already know. Putin’s rising prices are hitting Americans hard,” said President Joe Biden at the Port of Los Angeles, where he took a break from a regional summit to discuss what his team was up to. considers it the most pressing current issue: high prices for everything from gas to food.
At the same time, Biden tried to acknowledge the pain Americans are experiencing, explain how he seeks to resolve it, and shift the blame onto others.
“I see,” Biden said. “Inflation is a real challenge for American families.”
He criticized shipping conglomerates for raising prices and oil companies to buy back shares, citing oil giant Exxon for making “more money from God” last year.
– Kevin Liptak of CNN contributed to this report.
Add Comment