POSSIBLE PEAK
May’s consumer inflation data showed energy prices had risen 23.5 per cent over the same time last year, with gasoline rising by 40.5 per cent.
Grocery prices also rose significantly for the second month in a row, up 2.7 per cent over a year ago.
Other prices to increase over the month included medical care, personal care, airline fares and recreation.
Americans have been dealing with years of higher prices, with inflation remaining elevated long after the COVID-19 pandemic.
Prices have been fuelled by repeated shocks, including the Russian invasion of Ukraine, Trump’s tariffs and now the war on Iran.
Analysts, however, said that gasoline prices at the pump have recently stabilised, potentially indicating a favorable outlook for overall inflation.
“Higher energy prices again pushed up inflation last month, but we estimate that inflation has peaked and will trend lower in the second half of the year,” said Kathy Bostjancic, chief economist at Nationwide.
She added that this was assuming there was a “near-term resolution with Iran to reopen the Strait of Hormuz”.
Core CPI inflation, which excludes volatile food and energy prices, came in at 2.9 per cent in May, up from 2.8 per cent the month before.
“For now, there appears to be little pass-through of higher energy cost onto core inflation, outside of airfare,” said Gregory Daco, chief economist at EY-Parthenon.
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