Consumer prices jumped more than expected in May, but the surge in inflation looks to be temporary and should not push the Fed to tighten policy for now.
Consumer prices rose sharply in May, with the CPI jumping 5%, more than economists expected.
Economists said there are signs that rising prices could be temporary since they are centered in areas impacted by the pandemic. The consumer price index rose 5% in May on a year-over-year basis, the highest since 2008, when oil prices were skyrocketing. Excluding food and energy, core CPI rose 3.8% year-over-year, the highest pace since 1992. A third of the increase was attribute to a sharp 7.3% increase in used car and truck prices.
The Federal Reserve meets June 15 and 16. There was some market speculation that if inflation looked very hot, the central bank might move up the time frame on when it would begin to discuss cutting back its bond purchases. Many economists have been expecting the Fed to first talk about tapering bond buying at itsZoom In Icon"There's evidence it's transitory because a lot of the surge in prices are for things that are just normalizing...
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