Inflation spiked by 8.6% in May, according to the latest Consumer Price Index (CPI) report. The CPI is a measure of the average change in prices paid by consumers for a range of goods, including food, energy, and other consumer goods. According to the latest report, the Consumer Price Index for All Urban Consumers rose by 1% – seasonally adjusted. It also rose by 8.6% over May 2021.
While economists did expect prices to go up again in May, they predicted they would rise at a smaller rate – 8.3%.
It means that reports of inflation peaking earlier this year were wrong, and that and predictions from Treasury Secretary Janet Yellen were equally unrealistic. Yellen told CNN’s Wolf Blitzer in May that she had failed to accurately anticipate how long rising prices would hurt American consumers.
“I think I was wrong then about the path inflation would take,” Yellen said. “As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t, at the time, didn’t fully understand…but we recognize that now.”
Gas As A Driving Factor
The rising cost of gas at the pump appeared to be a driving factor in May’s inflation numbers, along with energy costs overall. Energy prices have risen by 34.6% over May 2021, with gas prices rising by 50%. According to the American Automobile Association’s public database of gas prices, the average price of a gallon of regular gas nationwide has reached $4.99 – and next month’s CPI report is expected to show yet another increase.
Electricity prices also increased by 12% in May, which was the biggest annual increase in costs since 2006 – a problem exacerbated by millions of working Americans still working from home and using more energy during the day.
How High Will Gas Prices Go?
While gas prices have reached a $4.99 national average, in 20 states those averages are now well above $5. California has seen the worst gas price hikes in the country, with a state-wide average of $6.42 per gallon of regular gas.
Those figures could get significantly worse this year, too, with analysts from JP Morgan warning that the national average could easily exceed $6 by the end of the year.
Tom Kloza, the global head of energy analysis for the OPIS, which provides the gas price tacking for the AAA, agreed with that assessment.
“Anything goes from June 20 to Labor Day,” Kloza said. “Come hell or high gas prices, people are going to take vacations.”
With prices skyrocketing across the board, and gas prices reaching the highest levels in documented history, President Joe Biden and Congressional Democrats face an uphill battle in their efforts to maintain control of Congress this November.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.
