Inflation Hits Fresh 40-Year High in May 2022

As many Americans are surely aware, the price of goods in the United States has been on the rise. This issue has been blamed on many factors, including supply chain issues, the war in Ukraine, labor shortages, and more. Regardless of the reasons behind it, the upward trajectory has not stopped. In fact, the latest report from the Bureau of Labor Statistics shows inflation hitting a new four-decade high.

For the 12 months ending in May 2022, the Consumer Price Index rose 8.6%. As CNN Money notes, this marks the largest year-over-year increase since 1981. During the month itself, prices rose 1% after a relatively modest 0.3% increase in April.

The overall spike was led by commodities, such as gasoline. Last month, gas prices were 48.7% higher than they were this time last year. Furthermore, prices rose 4.1% according to the Index. Elsewhere, food prices have also outpaced the overall rate, growing 10.1% over the past 12 months. More specifically, “food at home” prices have grown 11.9%, including a 1.4% increase in May. Notably, these figures might not even include cases of so-called “shrinkflation” where companies choose to lower the portion sizes of their product rather than raise prices.

Following the BLS’s report this morning, the stock market reacted negatively. For a time, the Dow Jones Industrial Average had fallen as much as 800 points during the day while the S&P 500 is currently down more than 2.5%. The results also increase fears about the United States entering a recession.

As Loyola Marymount University economics professor and SS Economics president Sung Won Sohn told CNN, “The probability of a recession in the next year or so is rising. Inflation is eating away at consumers’ purchasing power.” Sohn added, “Since consumer spending accounts for about 70% of the economy, a real decrease in consumer spending would deal a big blow to the economy.”

While it comes as no surprise that inflation continues to be a problem, May’s report is seemingly worse than expected. Furthermore, unlike in some recent months, May saw prices rising across all CPI categories, with Aditya Bhave and Meghan Swiber of Bank of America Securities noting to Axios, “Stepping back, we are struck by the fact that there were almost no pockets of weakness in this report.” In turn, expect inflation to not only be a major economic issue in the coming months but also a political one as the midterm elections near.

Leave a Reply

Your email address will not be published.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Top 10 Personal Finance Articles of the Month — June 2022 

It’s time again for one of my favorite features here on Dyer News: a look at the top 10 personal finance articles of the month. To start, we'll take another look at financial independence and freedom. Then, with the housing market going a bit crazy lately, we'll feature a pair of articles on home buying. Lastly, we'll cover tips for one-income households, finance after death, fighting inflation, and more. As...

Bilt Rewards Launches Travel Portal with Benefits for Cardholders

Last year, the startup Bilt made a splash when it announced a new service that would reward users for paying their rent. That premise was then expanded upon with the launch of the Bilt Mastercard, which is issued by Wells Fargo. Now, continuing to capitalize on both the hype of their product and the demand for travel, Bilt has debuted another new offering for customers. This week, Bilt Rewards announced...

Cash App Introduces Round-Up Investing Feature for Debit Card

Debit card customers looking to grow their investments gained a new, automated option today as Block Inc. (formerly Square Inc.) officially announced a new feature for its popular Cash App. Now, customers with the Cash App Cash Card can opt into Round Ups as a means of growing their investments. When this feature is toggled on, Cash App will round up debit card purchases to the nearest dollar and invest...