Higher gas, clothing, lumber and labor costs squeeze consumers

American consumers absorbed another surge in prices in May — a 0.6% increase over April and 5% over the past year, the biggest 12-month inflation spike since 2008.

The May rise in consumer prices that the Labor Department reported Thursday reflected a range of goods and services now in growing demand as people increasingly shop, travel, dine out and attend entertainment events in a rapidly reopening economy.

The increased consumer appetite is bumping up against a shortage of components, from lumber and steel to chemicals and semiconductors, that supply such key products as autos and computer equipment, all of which has forced up prices. And as consumers increasingly venture away from home, demand has spread from manufactured goods to services — airline fares, for example, along with restaurant meals and hotel prices — raising inflation in those areas, too.

In its report Thursday, the government said that core inflation, which excludes volatile energy and food costs, rose 0.7% in May after an even bigger 0.9% increase in April, and has risen 3.8% over the past year. That is the sharpest 12-month jump in core inflation since 1992. And it is far above the Federal Reserve's 2% target for annual price increases.

In the metro region

In the 25-county region that includes Long Island, prices rose 3.2% last month compared with May 2020 when including fuel prices — up 41.2% compared with May 2020 — in the mix.

The cost of clothing in the region was up 11.6% year over year, the largest such increase since March 1989, and household furnishings rose 9.2%, for the largest yearly increase in more than 40 years. Those increases were partially offset by a 1.4% yearly decline in grocery prices, though the country as a whole saw a monthly increase in food prices of 0.4%, with beef prices up 2.3%.

The cost of new and used automobiles was up 12.8% in the area, with used vehicle prices jumping 29.6% in the past 12 months.

The increase in vehicle prices nationally reflects supply chain problems that have caused a shortage of semiconductors. The lack of computer chips has limited production of new cars, which, in turn, has reduced the supply of used cars. As demand for vehicles has risen, prices have followed.

Labor costs

From the cereal maker General Mills to Chipotle Mexican Grill to the paint maker Sherwin-Williams, a range of companies have been raising prices or plan to do so, in some cases to make up for higher wages they are now paying to keep or attract workers. This week, for example, Chipotle Mexican Grill announced it was boosting menu prices by roughly 4% to cover the cost of raising its workers’ wages. In May, Chipotle had said that it would raise wages for its restaurant workers to reach an average of $15 an hour by the end of June.

The inflation leads some to worry that the Fed will eventually respond by raising interest rates too aggressively and derailing the economic recovery.

The central bank, led by Chairman Jerome Powell, has repeatedly expressed its belief that inflation will prove temporary.

With James T. Madore