Inflation Goes Wild: Consumer Prices Up 5% In May
As the US economy reopens, inflation is making a comeback, lifting consumer prices up by 5% during May. This is the fastest year-over-year pace since 2008. Surging demand experienced by many businesses is choking off supply chains trying to keep up with demand.
RELATED: Restaurant Prices Rise Amid Inflation, Labor Shortage
Higher Consumer Prices Are Eroding Consumer Purchasing Power
Rising prices in the red-hot yet fragile US economy continue to drive prices higher. This in turn continues to erode consumer purchasing power.
This is according to the latest Consumer Price Index report. The Bureau of Labor Statistics released an update last Thursday.
During the early days of the pandemic last year, manufacturers cut production down as demand fell off a cliff. Now, these same producers are scrambling to fill orders from pent-up demand.
With the new demand comes new purchasing contracts, which necessitated bulk orders of raw materials. With higher material prices and bigger labor costs, prices of limited commodities went up.
Consumer Prices Are Up
For example, airline fares are up by over 24 percent due to increased demand. Retail clothing suffered heavy losses as many people didn’t want new clothes while they stayed at home.
Now, they’re raising prices by 5.6%. Meanwhile, the food price index was up by 2.2 percent compared to last year. When grocery item prices spiked during the pandemic due to limited stocks, they have yet to go down to pre-pandemic levels.
Basic food item prices are going up. Bacon is 17 cents higher in May ($5.40 for a 16 oz pack) than in April ($5.23) In contrast, the January price for the same item is $4.72.
Prices are even higher in metropolitan areas. New York places the cost of bacon currently at $6.49, 39 cents higher than the $6.10 rate in April. In San Francisco, bacon rose from $5.71 in January 2020 to $6.55 in April to $.682 in May.
Paying More For The Same Items
Phil Tedesco, vice president of retail intelligence analytics at NielsenIQ, says the difference is apparent. “Across a wide basket of the most popular 5,000 items, shoppers are paying +0.4 pts more for groceries in May of 2021 vs May of 2020,” he said.
The disappearance of promotions and discounts also made consumer prices higher for many items. “This indicates shoppers are not able to take advantage of as many discounts in-store as they did in a pre-Covid period,” Tedesco said.
Looming Price Increases
Many economists expect price increases to continue over the summer as demand continues to grow. Despite the rise in demand, supplies of goods, as well as an apparent labor shortage, can dampen sales.
Diane Swonk, the chief economist at Grant Thornton, remains tentative. “I think we're still going to have a warm summer when you have surge pricing kicking in for everything from airfares to hotels,” Diane Swonk, chief economist at Grant Thornton, told CNBC.
Watch CNBC’s Jim Cramer reacting to consumer prices jumping 5% in May:
Are you experiencing the hit of higher prices now? Do you expect consumer prices to continue going higher?
Tell us what you think of rising prices. Share your thoughts in the comment section below.
We are on fixed income (social security)and it is getting more difficult to buy groceries, or go out to eat, which we used to do two yo three times a week.
Yes seems so. The Dems are ruining this country daily as I write this!! Very scary and sad. We need Trump to take over asap!!!! There is no US anymore as we knew it. I fear for 6 mos. down the road and beyond. What is happening??? Stop this NOW!!!
It’s inevitable. I figured everyone saw what was going to happen a year down the road. Here we are, one year later and it’s true. Prices are sky high as demand spikes. People are as politically polarized as ever, and using “science” to defend their extremism (on BOTH sides of the isle).
It’s the new world order. We were warned decades ago this would happen. However the social supports like social security and health care that we all need at some point aren’t possible without some form of socialism. Or capitalism didn’t have any checks and balances in and if itself. Social democracy mixed with capitalism did but how far are we going to let it go? Personal privacy is where it should stop but that line was drawn and crossed early in the game when social security numbers became used for personal identification nationwide. Now we were faced with personal freedom. We allowed that line to be drawn and crossed when we were threatened with the law, enforcing us to wear masks. I did not. I was prepared to be arrested, I was not. I was prepared to get kicked out of stores, I only got kicked out of one has station. Throughout the pandemic I never wore a mask. We still have freedom of choice, but that has proven to be socially unacceptable.
Everyone needs to write or send tweets, messages, Facebook, anything to their mayor, governor, senators, congress, representatives. Especially those in democratic positions that realize the moderates on both sides are going to be impacted more and more with the current administration decisions and those politicians that are suppose to stand up for their constituents. We all can’t just sit by and wait. Your voice, regardless of race religion or politics must be heard.
All I can say is that hatred of Donald Trump brought this on. Democrats and people in general couldn’t see past their own hatred for 1 man so we put in an administration that is so far left that their policy’s are ruining our country from economics, inflation, persecution of white people and Christians. We are starting to wake up, a little too late. I hope there is a turn around in 2022. I realize the Republicans don’t have it all straight either, especially as the far Right is as bad as the far Left. They say people pray as their last resort, but I pray we all start praying for God to intervene so we can take back the soul of our country. We have become morally corrupt and when you lose sight of belief in God, and lose your moral compass, the only trajectory is down.
Electrical bid in Nov. was $4500. By the time we were ready in May it was $12,600. Hopefully prices will subside soon.
BEEF is high priced because the big 4 packers ( 3 are foreign owned) are taking advantage of the rancher and consumer. Our politicians are a sleep and do not care the packers are making record profits as the rancher in the US is going bankrupt. Wake up America, you are eating beef from Canada and Africa and Mexico and other foreign countries and paying record prices. The big 4 packers need to be broken up.
President Biden’s policies are hurting the common people. Cost of all basic needs will go up, way up and the Democratic Party leaders could care less. The attack on oil and gas in our country will lead to hyper inflation. Folks this is just starting it will get worse. Now Biden is in Europe kissing everyone’s ass and giving them everything and working to destroy the US, in the name of climate change.
Welcome to the front door of socialism/communism people! We let this happen by continuously voting in sellout Republicans that are the biggest cowards in Government. The pos liberals pushed a little at first but they soon realized that they could literally take it as far as they wanted because no one,…..including all of us weak ass so called patriots are allowing them to do so with absolutely no push back???? Every time I say the obvious truth that the ONLY way to ever recover from this will be by force from the people someone like these talking head radio mouth pieces get all bent about how a civil war is not the answer. Well my question is then HOW ELSE CAN WE TAKE THE COUNTRY BACK??? Elections are rigged from here on out. Our so called GOP scumbags have sold out to the left. We have very little voices in media so too many stupid idiots are buying into this and the more we allow it to go on the farther we are from ever getting the country back! The truth hurts but our once great country is pretty much done!
“ECONOMYInflation Goes Wild: Consumer Prices Up 5% In May”
Joe Biden at work. The ‘winningest’ Presidential election victor in history.
You think it’s bad now wait till mortgage rates go up…wait till credit card interest rates go up….and when that happens guess what else is going to go up….CRIME!!!!!… murders are up big time in Chicago Philly New York I don’t know where you live….I live 50 miles from New York City just make sure you have plenty of ammo and your guns are clean and they’re working properly…..this ain’t no dress rehearsal…you are only here at one time
Its Atypical of a rogue government that allowed theft of elections to continue to steer America over the cliff. Runaway spending, circus and bread, theft, ignorance to rule of law, etc… The foxes are now in the henhouse. We the people must stop it! Higher fuel cost, energy cost, food cost, even simple car parts. We’ve had to curtail several things because we just can’t afford them. Biden and his ilk; NOT MY PRESIDENT!!!
President Donald Trump wasn’t perfect, but he loved America and Americans.
we need Trump back the Democratic party is screwing the middle class
Everything shouldn’t be just regular going up and thing of the people out there can not even afford to do anything much less trying to make it from day to day.
On the voting choices you should have included ALL THE ABOVE. Thank you so much Joe and the rest of the dems.