By Natalie DeCoste

Fears of high inflation are growing as prices for consumer goods are rising at a pace not seen since 2008.

The Consumer Price Index (CPI) rose 5% in May from a year earlier, the largest 12-month increase since a 5.4% increase in August 2008. The jump outpaced the 4.7% increase that economists expected. This month’s rise is an acceleration from the 4.2% rise that occurred in April.

The core-price index, a more stable measure of inflation, also rose 3.8% in May from a year before. This is the largest increase for the core-price index since June 1992. This measure rose 0.7% during May after increasing 0.9% during April.

One of the more significant increases that came to light in the Labor Department’s news release is the index for used cars and trucks, which continued to rise sharply. This measure rose an astonishing 7.3% in May. Other measures also experienced increases, including the indexes for furniture, airline fares, and apparel.

The current measures are compared to last year’s prices, which were significantly impacted by the COVID-19 pandemic. The current numbers have been impacted by a base effect, where the year-ago numbers were depressed by pandemic-driven shutdowns, making the current figures look large by comparison. Economists expect the impact of the base effect to dwindle in the fall.

However, the question remains as to how much inflation will settle back down after the base effect has worn off. Currently, there are many factors leading to higher consumer prices as the economy reopens. Prices for new vehicles are up 1.6% from the previous month because of computer chip shortages that have delayed production. Food prices in the restaurant industry have also increased to meet the raised wages businesses say are needed to bring employees back to work. This has resulted in a 4% year-over-year increase in the “food away from home” category of the CPI.

Meanwhile, prices in the housing sector are also moving upwards, indicating that price increases may be long-lasting. For example, rent and owners’ equivalent rent, which are two measures of housing costs that make up a large portion of the inflation reading but move slowly, are increasing, signaling long-term impacts.

Andrew Hunter, a senior U.S. economist at Capital Economics, noted both the cost of food at restaurants and the housing price measures as signs of economic change.

“While inflation is likely to fall back next year as base effects fade and some of the upward pressure on prices in the pandemic-hit sectors subsides, we expect core inflation to remain materially above the Fed’s target,” Hunter wrote in a note following the release of the CPI.