US Inflation At Highest Since 2008 - Prices Surge 5%
What Happened:
On Thursday, the Labor Department issued a report showing that the consumer price index increased an additional 0.6% in May, bringing total inflation to 5% over the last 12 months - the largest increase since 2008.
As the economy continues to rebound from the pandemic, economists are saying that a surge in demand has led to a shortage of labor and materials, thereby causing the inflation.
The labor market also seems to be on the road to recovery as initial claims for unemployment benefits reached another pandemic low.
The Central Bank, led by Chair Jerome Powell, continues to say that it believes the inflation is only temporary and that things will return to normal once supply chains are flowing regularly.
A concern of many investors is that the intensifying inflation will lead the Fed to respond by raising interest rates and thereby curbing the economic recovery. Powell has tried to reassure investors by saying there are no plans to increase interest rates this year.
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