US inflation skyrockets, piling pressure on Biden

US President Joe Biden is struggling to help ease surging prices hurting American familes and damaging his popularity

US inflation surged to a new four-decade high in May, defying hopes that price pressures had peaked and deepening President Joe Biden's political troubles as Americans struggle to meet the cost of essentials like food and gas.

Government data released Friday put inflation at 8.6%, extending increases not seen for a generation, with gas prices hitting daily records fueled by Russia's invasion of Ukraine and supply chain challenges related to the pandemic.

"I'm doing everything in my power to blunt Putin's price hike and bring down the price of gas and food," he said Friday while speaking at the Port of Los Angeles.

The president has tried to hammer home his optimistic message about economic progress in the wake of the pandemic, including rapid GDP growth and record job creation, while pressing Congress to take action to lower costs on specific products.

But he acknowledged the rising inflation was a severe problem, saying in an earlier statement the United States "must do more -- and quickly -- to get prices down."

Prices continued to rise last month for goods including housing, groceries, airline fares and used and new vehicles, setting new records in multiple categories, according to the Labor Department report.

Some economists expected the easing of pandemic restrictions to cause a shift of US consumer demand towards services and away from goods, which they said would ease inflation pressures, but prices for services increased as well.

CPI rose one percent compared to April, after the modest 0.3 percent gain in the prior month, the Labor Department reported, far higher than expected by analysts.

Fuel oil more than doubled, jumping 106.7 percent, the largest increase in the history of CPI, which dates to 1935.

"We're calling on Congress to move on shipping legislation that would bring down the cost of moving goods overseas."

But with the pandemic still gripping other parts of the world, global supply chain snarls have caused demand to far outstrip resources. 

The University of Michigan consumer sentiment index -- which measures how American consumers feel about the economy, personal finance and business and buying conditions -- fell sharply Friday from 58.4 to 50.2, its lowest recorded value.

The CPI surge "raises the probability of even more aggressive Fed rate hikes to tamp down on inflationary expectations," said Mickey Levy of Berenberg Capital Markets, adding that a pause in rate hikes in September is "looking increasingly unlikely."

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