America has another hot inflation reading on its hands.
Consumer prices posted their biggest year-over-year surge in more than a dozen years, according to data released on Thursday.
The CPI accelerated 5 percent in the 12 months through May. We haven't seen that kind of price surge since August 2008.
The larger-than-expected jump in consumer inflation in May came largely from a continued surge in used car prices.
Demand for used cars has soared this year due to a chip shortage impacting new car production.
The rate of change for the entire consumer price index is also being impacted by a drop in prices last year during the onset of the health crisis.
But on a month-to-month basis, prices are also sharply higher - up 0.6 percent in May following a 0.8 percent jump the month before.
Looking closer at the components: consumers continued to pay higher prices for airfares as demand comes roaring back after more Americans get vaccinated and begin traveling far from home.
Gains in food prices were the same as the month before, but the cost of gasoline dropped despite the brief spike in some parts of the country caused by the Colonial Pipeline hacking.
For investors, the focus is now on the Federal Reserve and how it might respond. The Fed has said it sees the recent uptick in inflation as short-lived and tied to an economy that's rebounding from 14-months of subdued activity due to a health crisis that's now lifting. It has signaled a willingness to let the economy run a little hot in order to allow the benefits of the rebound to spread to lower incomes.
Some of those incomes are no longer as low as they used to be with paychecks 2 percent fatter than they were a year ago.