May 12, 2021 - Economy

Inflation climbs at quickest pace since 2008

Data: CPI. Axios Visuals

The latest gauge on inflation released Wednesday morning showed that prices rose 4.2% over last year, based on the Consumer Price Index (CPI).

Why it matters: The gains were highest since September 2008, stoking new fears of inflation. Prices jumped significantly compared to the start of the pandemic last year, when lockdowns drove down demand.

  • Energy prices rose the most by 25%, followed by used cars and trucks at 21%.
  • Apparel prices grew by nearly 2% after seeing two months of consecutive declines.

The big picture: More consumers have grown worried about rising costs and say they are adjusting how they will spend as a result. However, most economists and the Fed maintain that the price swing will be temporary.

For context: Prices grew 2.6% year-over-year in March as the U.S. administered its 100 million COVID-19 vaccine dose, weeks ahead of schedule.

  • Consumer prices have been more volatile over the past year than at any point in decades, per Axios' Felix Salmon.

Our thought bubble: This is a shockingly high number, writes Felix. But it’s less shocking when you strip out used cars, and it doesn’t come close to answering the all-important question of whether it’s a blip or the start of something sustained.

A few signs of the reopening expansion, by the numbers:

  • Full service meal prices have gone up by 3.7%, and is an increase from last month's yearly growth of 3.2%.
  • Has rage baking stopped? Prices of flour and prepared flour mixes have gone down month-over-month by nearly 2%, while the price of grocery baked goods like doughnuts and bread have gone up over 2%.

This story is breaking news. Please check back for updates.

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