Energy and Food Drive US Inflation to Highest for 40 years

Last month, prices in the United States rose faster than expected, as rising energy and food costs pushed inflation to its highest level since 1981. According to the Labor Department, annual inflation rose to 8.6 percent in May after easing in April. The rising cost of living has squeezed households and put pressure on policymakers to address the issue.

Since March, the US Federal Reserve has been raising interest rates. Analysts hoped that the moves would begin to cool economic activity, easing price pressures. However, the conflict between Russia and Ukraine has increased the price of oil and commodities such as wheat while disrupting exports from both countries, making resolution more difficult.

Food prices increased by more than 10% last month compared to May 2021, while energy prices increased by more than 34%. However, according to the report released on Friday, the increases are continuing to spread throughout the economy, raising the prices of everything from airline tickets and clothing to medical services.

"So much for the idea that inflation has peaked. Consumer prices blew past expectations - and not in a good way with the 8.6% annual increase the fastest in more than 40 years," said Greg McBride, chief financial analyst at Bankrate.com.