Inflation in the United States rose at its fastest pace for six months in May because of sharply higher energy costs. Consumer prices rose 0.6% last month, government figures showed, the steepest monthly increase since last November.
Petrol costs surged 5.7% in May driven by the soaring global cost of oil which recently reached more than 139 US dollars a barrel. Rising inflation is a worry for the Federal Reserve, which has cut rates aggressively to stimulate growth. May's figure topped market expectations and represented a jump from April's 0.2% rate. On an annual basis, inflation touched 4.2% in May, again above analysts' expectations. Gasoline prices rose at their fastest monthly rate this year while food prices rose 0.3%. Excluding fuel and food costs, so-called core inflation was up 0.2% on a monthly basis and 2.3% compared with a year ago. The figures increase the prospect that the next move in US interest rates could be up. The Fed has slashed rates in the past eight months as the economy has slowed dramatically but it will be mindful of evidence of growing inflationary pressures. But analysts said price inflation was largely confined to energy at this stage. Another disturbing factor for the US economy was the continuing sub prime crisis with the number of homeowners falling into serious arrears with their mortgage payments which jumped by 48% in May compared with the same period the year before. According to RealtyTrac, the US foreclosure monitor, in May 261,255 American homeowners filed for foreclosure, with one in every 483 households across the country having either lost or on the brink of losing their home. The foreclosure process refers to any homeowner who is more than a month in arrears with mortgage repayments but also includes a property owner who has been served a default notice, whose home has been repossessed by the bank or whose property is about to be auctioned.