- The U.S. Consumer Price Index (CPI) rose 8.6% in May versus the prior year, the highest rate since December 1981
- The University of Michigan Index of Consumer Sentiment hit a record low of 50.2
- The OECD cut its 2022 global economic growth forecast to 3.0%
Top Three Market Headlines
Inflation Accelerates in May: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 1.0% in May from April, accelerating from a 0.3% pace in April. On an annual (year-over-year) basis, the CPI surged 8.6% in May, up from 8.3% in April; the 8.6% rise in May was the largest 12-month increase since December 1981. The "core" CPI, which excludes energy and food costs, in May registered a 0.6% increase on the month and a 6.0% annual rise. Energy prices were up 3.9% in May from the prior month alone, and rose a substantial 34.6% over the prior year. Meanwhile, the food index jumped 1.2% on the month in May and 10.1% on annual basis, the first 10%+ rise since March 1981.
Consumer Sentiment Hits a Record Low: The Index of Consumer Sentiment published by the University of Michigan plunged 8.2 points in June to 50.2, the lowest monthly reading on record (the index has been published monthly since 1978). The index, based on surveys of consumers about their outlook on the U.S. economy, has now plummeted 40% from its recent cycle high of 84.9 in March 2021. Meaningful declines were recorded in May in respondents' year-ahead outlook for business conditions and consumers' assessments of their personal financial situation. Weakness in the latter was largely driven by concerns about inflation, particularly gas prices.
OECD Slashes Global Growth Outlook: The Organisation for Economic Co-operation and Development (OECD), an association of 38 countries across Europe, the Americas, and the Pacific, last week markedly cut its forecast for 2022 global economic growth from 4.5% to 3.0%. Key factors driving the incrementally lower forecast include the Russia-Ukraine conflict and the effect of China's zero-COVID policy on global supply chains. The OECD also noted that many countries are dealing with rising inflation, particularly among food and energy products, which threatens to curtail spending on other items.