Consumer Blow: Inflation Indicator Reaches Highest Level in Three Years
· Telemundo McAllen (KTLM)
The inflation indicator preferred by the Federal Reserve rose in May to a new three-year high, as gasoline prices reached their peak, signaling that rising costs could pose political challenges for President Donald Trump as midterm elections approach. The Commerce Department reported on Thursday that consumer prices increased by 4.1% in May compared to a year earlier, the largest year-over-year increase since April 2023. On a monthly basis, inflation was 0.4% last month, matching April's increase and down from 0.7% in March. The rise was largely driven by higher gasoline prices, as well as more expensive semiconductors and other computing equipment that are in high demand due to the rollout of AI. The price increase has led those combating inflation at the Federal Reserve to keep their key rate unchanged this year, a shift from January when they anticipated two cuts. Some economists predict that the central bank may instead raise rates this year. 'Core inflation is closer to 3% than to 2%,' said Mark Vitner, chief economist at Piedmont Crescent Capital. 'It does suggest to me that the Fed's next move, whenever it occurs, will likely be a hike and not a cut.' He added that the Fed is unlikely to raise rates until next year.
AI summary · Source: Telemundo McAllen (KTLM) →
