span>Thursday/span>10th June 2021 - 13:55 (BST)
Figures released by the US Bureau of Labor Statistics have shown consumer prices continued to push higher over May, further fuelling concerns that the world’s largest economy is overheating.
The latest CPI reading of 5% is the highest since August 2008 and comes against a backdrop of record government fiscal support, supply chain bottlenecks and increased consumer spending following the successful nationwide rollout of coronavirus vaccinations.
Core inflation, which strips out volatile food and energy costs, hit its highest year-on-year level since 1993 – up 3.8% in May from 3% in April.
The news follows comments from U.S. Treasury Secretary Janet Yellen over the weekend welcoming President Bidens recently announced $4 trillion spending plan, despite the potential for increased inflation and rising interest rates.
Yellen told Bloomberg: “We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade” - increasing the likelihood of a change in approach from the Federal Reserve before the end of 2021.
GBP/USD and EUR/USD both moved to the higher end of the recent range following the data with attentions now turning to the Federal Reserve meeting next week where runaway inflation could be addressed.
