Arthur J. Villasanta – Fourth Estate Contributor
Washington, D.C., United States (4E) – Inflation throughout the United States zoomed to a six-year high in May, erasing whatever small wage gains were made on account of the uneven growth of the economy in favor of the rich to the detriment of middle-class and poor Americans.
The U.S. Department of Labor said the consumer price index (CPI), the traditional measure of inflation, rose 0.2 percent in May from April and 2.8 percent year-on-year, excluding food and energy. The annual increase in core CPI, which is a better gauge of underlying inflation trends, was the biggest since February 2012.
The Labor Department said the jump in headline inflation partly reflects the rise in fuel prices. Seasonally adjusted gasoline prices rose 1.7 percent in May from April after a three percent gain in April from March.
The Federal Reserve is widely expected to raise borrowing costs this week for the sixth time in 18 months. Financial analysts said the inflation spike will influence policy makers on the upcoming rate increases for the second half and in 2019. Investors see the Fed as raising interest rates at its two-day meeting that starts on Tuesday in Washington, D.C.
The inflation rise also bolsters the Fed’s preference for a gradual interest-rate hike. Wage gains have remained relatively weak despite an 18-year low in unemployment. The unemployment rate fell to 3.8 percent in May, matching the lowest in 48 years.
A separate Labor Department report illustrated how higher prices are hurting wage earners. It revealed that average hourly wages, adjusted for inflation, were unchanged in May from a year earlier. On the other hand, nominal pay rose to a 2.7 percent annual gain in May from 2.6 percent in April. For production and nonsupervisory workers, real average hourly earnings fell 0.1 percent year-on-year.
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