Inflation in the United States rose by 8.6% from a year ago for the fastest increase since December 1981, the Bureau of Labor Statistics reported on Friday.
The consumer price index, a wide-ranging measure of goods and services prices, increased even more than the 8.3% Dow Jones estimate.
The central bank is expected to announce a half-percent interest rate hike next week, but it could decide to go higher based on this news
“We think the US central bank now has good reason to surprise markets by hiking more aggressively than expected in June,” wrote Barclays analysts in a research note on Friday. We realize it is a close call and that it could play out in either June or July. But we are changing our forecast to call for a 75bp hike on June 15.”
The White House, meanwhile, conceded that the number was “uncomfortably high,” further stoking investor fears of policy action.
“The major risk to consumption, employment, and the economy overall, isn’t an organic growth slowdown, but the extent to which extreme energy/food price increases could cause central banks to push (ineffectually) against the string, and [the economy could] essentially fall into a damaging policy mistake,” wrote Rick Rieder, chief investment officer of Global Fixed Income at BlackRock in a note.