WASHINGTON – U.S.
Vaccinations against COVID-19, trillions of dollars from the government and record-low interest rates are whipping up demand, leaving companies scrambling for raw materials and labor.
“Parts of the economy contributing the most to inflation in April and May are going through understandable short-term adjustments or merely reflating back to ‘normal’ levels,” said Chris Low, chief economist at FHN Financial in New York.
The consumer price index increased 0.6% last month after surging 0.8% in April, which was the largest gain since June 2009.
The core CPI shot up 3.8% in the 12 months through May, the largest increase since June 1992.
central bank’s preferred inflation measure, the personal consumption expenditures price index, excluding the volatile food and energy components, rose 3.1% in April, the biggest gain since July 1992.
Inflation could get a boost from the labor market, where layoffs are subsiding.
In another report on Thursday, the Labor Department said initial claims for state unemployment benefits fell 9,000 a seasonally adjusted 376,000 for the week ended June 5.
Though layoffs are subsiding, claims remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market.
The number of people continuing to receive benefits after an initial week of aid decreased 258,000 to 3.5 million during the week ended May 29.
Worker shortages, despite employment being still 7.6 million jobs below its peak in February 2020, boosted wage growth in May.