Inflation rises significantly in May, up to 8.6% year over year

Inflation reaccelerated in May, rising at the highest level seen in four decades, dashing hopes that the number had hit its peak, according to data released by the federal government Friday.

The consumer price index, or CPI, stood at 8.6% year over year in May, a significant increase from 8.3% the month prior, according to the U.S. Bureau of Labor Statistics. That is the largest 12-month increase since the period ending December 1981.

On a monthly basis, the consumer price index rose 1% in May, far outpacing the 0.3% rise seen in April, according to the bureau.

Energy, food and housing costs contributed to the surge in prices. The new data arrives a day after the nationwide average price for a gallon of gas reached $5, according to GasBuddy.

The core consumer price index, which strips out food and energy costs, rose 0.6% on a monthly basis in May, the same increase that it saw in April, according to the Bureau of Labor Statistics.

"The increases were nearly ubiquitous," Greg McBride, the chief financial analyst at personal finance advisory firm Bankrate, said in a statement. "Just no place to hide."

"Inflation continues to rear its ugly head and hopes for improvement have been dashed again," McBride added.

Energy prices climbed dramatically last month, up 3.9% on a monthly basis after falling 2.7% the month prior. Gasoline prices in particular rose even higher than the overall energy index, increasing 4.1% last month.

Food prices also spiked in May, increasing 1.2% last month. Notably, the index for dairy and related products rose 2.9%, the highest monthly increase for those products since July 2007.

"Given the impact of [Vladimir] Putin's price hike at the pump, on gas prices in May, we expect the headline inflation number to be elevated," White House press secretary Karine Jean-Pierre told reporters Wednesday in anticipation of Friday's report. "And we expect the war in Ukraine to have some effect on core inflation too, particularly when you get things like air fares and the effect of higher jet fuel costs. But despite these disruptions and the fact that the numbers can be volatile from month to month ... we continue to believe that the economy can transition ... to stable, steady growth and inflationary pressures moderating, which is what experts have been saying for some time now."

The new data emerged as the Federal Reserve is set to meet next week, and is expected to raise its benchmark interest rate as part of an effort to dial back inflation.

Speaking at the Port of Los Angeles on Friday afternoon, President Joe Biden addressed the inflation data released earlier in the day.

"Make no mistake, I understand that inflation is a real challenge to America's families," he said.

Attributing a disruption of food and gas markets to the Russian invasion of Ukraine, Biden called the sky-high inflation "Putin's price hike" -- a term the administration has used repeatedly.

Biden emphasized positive features of the economy, such as a strong job market and high savings among U.S. households.

"Because of this progress, America can tackle inflation from a position of strength," he said.