Friday’s inflation report was a threefold blow to consumers, with massive rises in food, housing and energy prices, sectors that account for the majority of household spending, as well as in almost every other category.
But some of the biggest increases came in the home food sector, where the cost of groceries rose nearly 12 percent during the year ending May. This is the largest year – on – year increase since 1979.
The categories that experience the biggest price jump are usually staple foods: dairy, eggs and meat.
The price of eggs rose 32.2% from May 2021 to May 2022, according to the latest CPI. Meat, poultry and fish increased by 14.2% year-on-year and dairy products by 11.8%.
“Food and fuel are driving up inflation and creating problems for American households,” Joe Brusuelas, chief economist at RSM, said in a note Friday.
With 70% of the U.S. economy driven by the consumer, economists are closely monitoring behavioral changes. The latest monthly survey of consumer sentiment at the University of Michigan showed that confidence in the economic outlook plummeted in early June to its lowest level on record.
“We need to listen to what consumers have to say, but most importantly, we need to keep an eye on what consumers are doing,” said Jeffrey Roach, chief economist at LPL Financial.
“We expect a slowdown in consumer spending, as inflation and uncertainty weigh heavily on sentiment,” it said in a statement.
The Federal Reserve, which has a dual mandate to maintain price stability and maximum employment, is raising interest rates as a way to mitigate rising inflation and cool the economy, but is far from be an overnight process.
While the inflation report provoked further attacks on the Republican administration by Biden, the White House tried to blame the worst inflation on rising oil and gas prices after Russia invaded Ukraine .
“Today’s inflation report confirms what Americans already know. Putin’s price hike is hitting Americans hard,” President Joe Biden said in Los Angeles Harbor. ‘stopped by a regional summit to address what his team considers the most pressing current issue. : high prices on everything from gasoline to groceries.
Biden tried to acknowledge the pain the Americans were feeling, explain how he was trying to resolve it, and blame others.
“I get it,” Biden said. “Inflation is a real challenge for American families.”
He criticized shipping conglomerates for raising prices and oil companies for their share buybacks, and highlighted oil giant Exxon for making “more money than God” last year.
– Kevin Liptak of CNN contributed to this report.