Despite the Fed’s most aggressive interest rate hike since 2000, consumer prices continued to surge in May, adding to fears that inflation may be out of control. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) increased 8.6 percent over the last 12 months before seasonal adjustment, the highest reading since December 1981. 

Low interest rates, COVID-related supply constraints and strong consumer spending partly fueled by generous stimulus checks had already put upward pressure on prices before Russia’s invasion of Ukraine. The war’s severe impact on fuel and food prices has further fanned the flames, turning an inflation scare into a global crisis, according to a recent feature from Statista.com.  

As the chart from Statista.com shows, inflation has now been outpacing nominal wage growth for 14 months straight, meaning that Americans can afford less than they could a year ago, despite wages rising on paper. While average hourly earnings climbed 5.2 percent from $30.36 to $31.95 over the past 12 months, consumer prices soared 8.5 percent on a seasonally adjusted basis, resulting in a 3 percent decline in real hourly earnings.