U.S. consumer prices rose by 5% from a year ago in May, the largest inflation surge in 13 years, according to the Bureau of Labor Statistics. The Federal Reserve says it plans to keep interest rates steady and not overreact to the rise in inflation as the nation reopens. The White House Council of Economic Advisers cited the increase in consumer prices as a sign that the economy is improving, though Republicans argue that spending from the Biden administration risks "overheating" the economy.
- The core-price index, which excludes food and energy prices, rose by 3.8% from a year ago, the largest year-over-year rise in nearly 30 years.
- Much of the increase is due to the rising costs of new and used vehicles, furniture, and airfares.
- The significant jump in prices is partially due to a pandemic-related drop in consumer prices a year ago.
- The Fed believes the inflation surge will be temporary as the economy opens up and businesses hire new employees.
- New jobless claims declined last week to a new pandemic low of 376,000.