In May, the U.S. inflation rate jumped to 5% compared to last year, the highest jump in annual inflation in 13 years. The Core price index, an inflation indicator that notes the change in costs of goods and services that do not include the food or energy sectors, saw a 3.8% increase in May. This represents the highest increase of the index since June 1992.
- These inflation rates are higher than usual due to price comparison from last year. COVID-19 caused a huge drop in prices as the demand for goods and services during the pandemic dropped.
- Corn prices rose about 50% in 2021, contributing greatly to the increase in food prices. Corn makes up over 96% of animal feed grain in the U.S. A drought in certain South American countries also reduced corn supply.
- Higher shipping costs also increased the cost of food, while the Suez Canal blockage in March additionally backed up shipping for months.
- Overall, food prices have gone up 2.4% and restaurant prices have increased 3.8%.
- The Federal Reserve believes that prices will correct themselves once supply and demand forces even out as the economy recovers.