US consumer prices shot up 5% year-on-year in May, according to data released by the Bureau of Labor Statistics on Thursday—the steepest such rise since the depths of the recession in May 2008. Core inflation, another measure that omits food and energy prices, seemed even more superheated: 3.8%, the highest since June 1992.
Economists had already been predicting that prices would surge by around 4.7%. So the actual 5% figure fed anxieties that the US is settling into a sustained period of inflation—that the Fed is mistaken in its belief that this inflation is “transitory.”
But the details in the data suggest otherwise. And more importantly, the way in which the numbers are calculated suggests that we should really be waiting for a month—for the release of the June data in early July—before we begin to fret.
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