Five charts explaining why inflation is at a 40-year high

How much each product drove

up overall monthly inflation

Shelter

MAY 2021

+0.7%

Food

Used cars

and trucks

JUNE

+0.9%

JULY

+0.5%

AUG.

+0.3%

SEPT.

+0.4%

OCT.

+0.9%

Energy

Other

NOV.

+0.7%

DEC.

+0.6%

JAN. 22

+0.6%

FEB.

+0.8%

MARCH

+1.2%

APRIL

+0.3%

MAY

+1.0%

Airline

fares

Labeled numbers show one-month change in overall consumer inflation. Seasonally adjusted.

How much each product drove

up overall monthly inflation

Shelter

MAY 2021

+0.7%

Food

Used cars

and trucks

Other

JUNE

+0.9%

JULY

+0.5%

AUG.

+0.3%

SEPT.

+0.4%

OCT.

+0.9%

Energy

NOV.

+0.7%

DEC.

+0.6%

JAN. 22

+0.6%

FEB.

+0.8%

MARCH

+1.2%

APRIL

+0.3%

MAY

+1.0%

Airline

fares

Labeled numbers show one-month change in overall consumer inflation. Seasonally adjusted.

How much each product drove

up overall monthly inflation

Food

Shelter

Energy

Used cars

and trucks

Other

Airline

fares

Overall one-month change in consumer prices:

MAY ’21

+0.7%

JUNE

+0.9%

JULY

+0.5%

AUG.

+0.3%

SEPT.

+0.4%

OCT.

+0.9%

NOV.

+0.7%

DEC.

+0.6%

JAN. ’22

+0.6%

FEB.

+0.8%

MARCH

+1.2%

APRIL

+0.3%

MAY

+1.0%

Seasonally adjusted

Drivers of inflation in 2021

How much each product drove

up overall monthly inflation

Food

Shelter

Energy

Used cars

and trucks

Other

Airline

fares

Overall one-month change in consumer prices:

MAY ’21

+0.7%

JUNE

+0.9%

JULY

+0.5%

AUG.

+0.3%

SEPT.

+0.4%

OCT.

+0.9%

NOV.

+0.7%

DEC.

+0.6%

JAN. ’22

+0.6%

FEB.

+0.8%

MARCH

+1.2%

APRIL

+0.3%

MAY

+1.0%

Seasonally adjusted

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The bumpy economic recovery has had policymakers, economists and Americans households grappling with greater price hikes for gas, groceries, cars, rent and other essentials.

The latest inflation data, released by the Bureau of Labor Statistics, showed that prices in May climbed 8.6 percent compared with the year before, the highest measure in 40 years.

Persistent supply chain backlogs and high consumer demand for goods have kept prices elevated. More recently, Russia’s invasion of Ukraine has strained global energy markets and sent the national average for a gallon of gas near $5. There is no clear answer for when prices will subside, leaving Americans to feel the strain in their pocketbooks in the meantime. This is a breakdown of how we got here.

Economists caution against drawing too much from one month of data, good or bad. But policymakers have been forced to acknowledge that inflation is larger and more persistent than they expected, and that they must ramp up their efforts to rein prices in.

Inflation explained: How prices took off

The Federal Reserve has launched major interest rate increases to get inflation under control, penciling in seven hikes by the end of the year. Those hikes will slow the economy by making it more expensive to borrow money, which will discourage businesses from expanding and raise the cost of consumer loans like mortgages.

The challenge is a delicate one: If the Federal Reserve moves too forcefully to slow the economy, it could cause a recession and spell unwanted consequences for the job market and rest of the recovery.

“Inflation is much too high,” Fed Chair Jerome H. Powell said in May. “We understand the hardship it is causing, and we are moving expeditiously to bring it back down. We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.”

Fewer hot showers, less meat: How retirees on fixed incomes are dealing with inflation

The run-up in gas prices has become one of the most visceral ways people feel inflation in their daily lives. In some parts of the country, particularly on the West Coast, it’s not uncommon to find gasoline well above $5 or even $6 a gallon. The national average has set a record every day since May 30, according to AAA, though prices are still below 2008 levels when adjusted for inflation.

The concerns over soaring gas prices, home prices and rising rents have economists worried about whether cost increases will last even after the coronavirus pandemic has mostly passed, and if the Fed’s tools will be enough of a match. The White House points to its recent moves to lower prices, including through the release of 1 million barrels a day from the nation’s Strategic Petroleum Reserve and an emergency waiver to allow use of blended biofuels. But gas prices in particular have become a fraught economic and political issue for the Fed and Biden administration.

Families across the nation are also facing higher prices at the grocery store and could see more of a pinch if Russia’s invasion causes widespread shortages of wheat, corn and other items. People are also stretching their wallets for dairy, fruits and vegetables, baked goods and meats.

Throughout the pandemic, new and used cars have been a kind of litmus test for the country’s supply chain issues and related price hikes. Used cars and trucks were a driving force behind the surge in inflation last year.

The market relies heavily on trade-ins and auto parts, which have been in low supply during a global microchip shortage. That pinch has made it more expensive for dealers to get any of their models, much less repair them. All of those problems are also hurting the supply of used cars, which depend on trade-ins as well as rental car company inventories.

There are some encouraging signs. The rise in used car prices — which made up a bulk of inflation for much of the past year — has slowed in recent months and are expected to drop as semiconductor shortages improve. The red-hot housing market is also starting to cool, as a runup in mortgage rates discourages aspiring buyers from competing for the few homes available.

Data is from the Labor Department. Laura Reiley contributed to this report.

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