NEW YORK, (Reuters) – U.S. consumer price increases accelerated in May due to record gasoline prices and further rises in the cost of goods. This suggests that the Federal Reserve may continue its 50 basis point interest rate hikes until September to fight inflation.

Labor Department reported that the consumer price index grew 1.0% after increasing 0.3% in April. Reuters polled economists to forecast that the CPI will rise 0.7% per month. The CPI grew 8.6% in the twelve months to May after increasing 8.3% during April.

The CPI rose 0.6% in May, after moving by the same margin as April. Core CPI grew 6.0% over the 12 months to May. After a rise of 6.2% in April, this increase was 6.0%. All measures of inflation have far outpaced the Fed’s target of 2%.

COMMENTS:

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

The numbers are higher than we expected, however, this is mostly due to the high cost of energy. However, as summer approaches, there should be some relief.

These are not good numbers. However, higher energy prices should be accompanied by less energy use and an inflation cooling effect.

The Fed will continue to raise interest rates at 50 basis points per month in June and 50 in July, with a possibility of an additional increase in September.

It is clear that disposable income will decrease and it points to recession. We’ll likely experience a recession during the fourth quarter, and we can confirm this in the first quarter of 2023.

“I see a short and sweet recession, just a cooling off period and that’s going to be due to the consumer pulling back.”