Inflation sped up in May. What's to blame?
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What factors contributed to the inflation rise in May?
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I founded Ornot in 2013.
How does core inflation differ from overall inflation?
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What impact did the war in Iran have on inflation rates?
We'll do an update on where this economy stands. We'll do taxes, too. Sorry about that. And we'll spend some time alone. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Risdell. It is Thursday today. This one is the 25th of June. Good as it always is to have you along, everybody. This is a day of data in this economy of ours, data about prices and data about growth. 4.1% is the headline price level data point, as you have likely already heard today. The personal consumption expenditures price index for May. And that 4.1% is faster than April inflation, as you do not need me to tell you. Most of it thanks to energy and the president's war in Iran. So with energy on its way back down now on the theory that the ceasefire is going to hold,
How did Q1 GDP revisions affect economic outlook?
We are going to do what the Federal Reserve likes to do, spend some time on all the other inflation happening in this economy, the core rate, as it's called. As Marketplace's Justin Ho reports, that's picking up, too.
The rise in core inflation really started in April of last year when the president announced his import taxes. Those tariffs did push additional price pressures in the economy, particularly for the price of goods. Tim Dewey is chief U.S. economist at SGH Macro Advisors. He says later last year, core inflation started to hit services, too.
So that could be anything from insurance or health care services, financial services, food services, accommodations.
Dewey says the delay could be because tariffs took a little time to impact other costs. But it could also be because demand was strong, thanks to a good jobs market.
The labor market did seem to turn stronger at the end of last year.
And I would note that really some of our biggest accelerations in the inflation started in December and January and into March.
The war in the Middle East is boosting core inflation, too. Jeffrey Roach is chief economist at LPL Financial.
Think of logistics costs.
What challenges are Wyoming residents facing with property tax cuts?
Think of transportation costs.
Roach says that's increased the price of goods, and that, in turn, is boosting the cost of services, including health care.
When you think about the impact on the costs of the materials those professionals use... It starts to make sense, understanding why, for example, dental services is up over 8% from a year ago.
It'll take some time for the war's knock-on effects on prices to subside. Michael Pierce is chief U.S. economist at Oxford Economics.
If we look at gasoline prices, they've fallen back, but they're still about a dollar above where they were before the war. And it's going to take time for that to normalize.
Meanwhile, Pierce says there's still plenty of demand keeping prices high. And overall, the labor market is still in good shape.
Our expectation is that the labor market will be broadly stable this year, that we'll see the unemployment rate remain pretty close to where it is.
And that could keep pressure on prices to keep heading upward throughout the year. I'm Justin Ho for Marketplace.
The growth data point du jour is the third and final look at gross domestic product for the first quarter of the year.
How are Great Lakes cargo ships vital to U.S. supply chains?
It came to us courtesy of the Bureau of Economic Analysis, which told us this morning the economy grew at an annualized rate of 2.1 percent January through March. That is a revision up from the last guess, which was 1.6 percent, which is nice.
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Chapters
8 chapters
1
What factors contributed to the inflation rise in May?
0:02–0:33
2
How does core inflation differ from overall inflation?
0:33–1:00
3
What impact did the war in Iran have on inflation rates?
1:00–2:02
4
How did Q1 GDP revisions affect economic outlook?
2:02–3:12
5
What challenges are Wyoming residents facing with property tax cuts?
3:12–4:17
6
How are Great Lakes cargo ships vital to U.S. supply chains?
4:17–5:48
7
What is 'solo maxing' and how is it affecting Gen Z's dating culture?
5:48–6:50
8
What trends in socializing and spending are emerging post-pandemic?
6:50–27:18