Inflation Reaches 8.6%, Setting New Four-Decade High

The Consumer Price Index (CPI) rose 8.6% between May 2021 and May 2022, meaning that inflation surpassed record highs, a Friday morning report from the U.S. Bureau of Labor Statistics revealed.

The new figure surpassed the Dow Jones estimate of 8.3% year-over-year inflation — the same level seen in April 2022, according to CNBC.

Inflation refers to the percent change in the price level over a given period of time. The CPI, for example, tracks a hypothetical basket of goods and services that represents typical spending for an American household. A similar metric — Producer Price Index (PPI) — tracks price levels for businesses.

Though unemployment remains low in the United States, inflation has led to a drop in real average hourly earnings. Even as wages nominally grew between April 2021 and April 2022, real earnings dropped by 2.6% due to the faster rate of inflation.

In a recent CNBC survey of chief financial executives, more than 40% believed inflation is the main external risk factor for their business. Meanwhile, 23% point to Federal Reserve policy and 14% point to the war in Ukraine.