US Inflation Rate Quickens to 3.6%, Consumer Prices Rise 0.2% in May 2011

The cost of living in the US rose more than expected in May 2011 as US inflation picked up speed, according to the latest consumer price figures released by the government. Americans paid more for food, cars, clothing and recreation, although the cost of energy retreated as gas prices fell for the first time since last June.

Consumer prices rose 3.6 percent in the 12 months ending May 2011 after a 3.2 percent annual reading in April when prices at the pump were rising sharply. The year-over-year pick-up was the largest since October 2008. The 12-month US inflation rate was as low as 1.1% as recently as November. And while gas prices fell last month, they are a strangling 36.9 percent higher than one year ago. Higher food prices burden consumers further.

"The food index rose in May as well. The food at home index repeated its April increase of 0.5 percent as four of the six major grocery store food group indexes increased, with the index for meats, poultry, fish, and eggs rising the most. In contrast, the energy index, which had been rising sharply, declined in May," the US Labor Department said Wednesday in its monthly Consumer Price Index (CPI) report which is used as the main gauge for tracking US inflation.

"The upward trend among the 12 month increases of major indexes continued in May… The energy index has increased 21.5 percent over the last 12 months, the food index has risen 3.5 percent… All of these figures have been rising in recent months."

The so-called core US inflation rate, which strips out the more volatile energy and food prices, rose 1.5 percent over the past year as compared to the 1.3 percent increase in April. The May increase was the highest since January 2010.

The Consumer Price Index was higher on a monthly basis than many analysts expected as well. Consumer prices rose 0.2 percent in May 2011. While down from the 0.4 percent gain in April, many economists’ had forecasted a 0.1 percent increase.

"Slower growth, both here and abroad, appears to be increasingly likely," Jim Baird, chief investment strategist for Plante Moran Financial Advisors, was quoted on MarketWatch. "The various headwinds to the consumer in the US and significant inflationary pressures in many emerging markets, particularly in food costs, are acting as a drag on spending globally."

More surprising was that the core reading showed a monthly increase of 0.3 percent, the biggest one-month gain since July 2008.

"Core inflation pressures are a lot stronger than we’ve been seeing in recent months," Dean Maki, head of U.S. economic research at Barclays Capital in New York, was quoted on Reuters. "This will make the Fed more cautious on any additional actions."

The core US inflation rate rose 0.2 percent in March.

Consumer prices on the 12-month level and between November 2010 and May 2011, as reported by the US Labor Department, are shown below:

May 2011 Consumer Prices – Gains (%)

Nov Dec Jan Feb Mar Apr May 12
Month
All items 0.1 0.5 0.4 0.5 0.5 0.4 0.2 3.6
  Food 0.2 0.1 0.5 0.6 0.8 0.4 0.4 3.5
    Food at home 0.3 0.1 0.7 0.8 1.1 0.5 0.5 4.4
    Food away from home 0.1 0.1 0.2 0.2 0.3 0.3 0.2 2.2
  Energy 0.2 4.6 2.1 3.4 3.5 2.2 -1.0 21.5
    Energy commodities 0.8 7.5 4.0 4.8 5.5 3.1 -1.9 36.2
      Gasoline (all types) 0.7 8.5 3.5 4.7 5.6 3.3 -2.0 36.9
      Fuel oil 4.2 4.9 6.8 5.8 6.2 3.2 -0.8 36.0
    Energy services -0.7 0.5 -0.6 1.1 0.2 0.6 0.6 1.1
      Electricity 0.9 0.3 -0.5 0.4 0.7 0.2 0.8 1.8
      Utility (piped) gas service -5.7 1.4 -1.2 3.4 -1.4 1.9 -0.3 -1.2
  All items less food, energy 0.1 0.1 0.2 0.2 0.1 0.2 0.3 1.5
    Comm. less food, energy -0.1 .0 0.2 0.2 0.1 0.4 0.5 1.2
      New vehicles -0.4 .0 -0.1 1.0 0.7 0.7 1.1 3.4
      Used cars and trucks -0.5 -0.1 -0.3 0.1 0.8 1.2 1.1 4.1
      Apparel 0.2 0.1 1.0 -0.9 -0.5 0.2 1.2 1.0
      Medical care 0.2 0.1 0.5 0.7 0.5 0.5 .0 3.0
    Services less energy 0.2 0.1 0.1 0.2 0.2 0.1 0.2 1.6
      Shelter 0.1 0.1 0.1 0.1 0.1 0.1 0.2 1.1
      Transportation 0.5 0.2 0.6 0.5 0.5 0.2 0.1 3.3
      Medical care 0.1 0.3 -0.1 0.4 0.1 0.3 0.3 3.0

 

The Labor Department will release the next round of Consumer Price Index (CPI) statistics for June 2011 on July 15, 2011 at 8:30 AM Eastern Time. The CPI data is used as the core engine for the Inflation Calculator.

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