Consumer prices rose 0.6% last month

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An economist says consumers should expect prices to keep going up

The cost of living rose again in May, but not quite as much as in April. The Labor Department reports the Consumer Price Index (CPI) rose 0.6% last month, compared to 0.8% in April. Year-over-year consumer prices rose 5%, the biggest annual increase since August 2008, just before the financial crisis.

The numbers should come as no surprise to consumers, who have seen higher prices in just about every corner of the economy, from the supermarket meat counter to the gasoline pump.

Prices are also surging on the used car lot, fueled by a shortage of new cars. The index for used cars and trucks jumped 7.3% last month, accounting for about one-third of the seasonally adjusted all items increase. 

Food prices, as measured in the survey, increased 0.4%, the same as in April. The energy index was unchanged in May, with a decline in the gasoline index once again offsetting increases in electricity and natural gas.

An economist’s take

The CPI, excluding the volatile food and energy sectors, was up 0.7% following a 0.9% rise in April. Economist Joel Naroff of Naroff Economics said consumer prices are soaring and in May, were higher across almost all categories.

“Only energy was down and that could easily turnaround in June,” Naroff told ConsumerAffairs.  “The increase over the year was the second-highest in thirty years, which was also true when you exclude volatile food and energy.”

Naroff cautions consumers that inflation pressures are not likely to ease anytime soon, as demand is expected to increase faster as the economy reopens completely.  

“It is looking as if inflation this year will be the highest since 1991," he said.

In addition to food and used cars, apparel prices were higher in May as millions of people prepared for a return to the workplace. Clothing prices rose 1.2% and were up 5.6% from May 2020.

The cost of putting a roof over your head also crept higher last month. May shelter costs were up .2% and 2.2%  on the year. 

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