On The Money — Inflation worse than expected

Prices rose at an even faster rate in May. We’ll also look at where inflation hit the hardest last month, President Biden’s fighting words with big oil, and a stock selloff. 

But first, see why sriracha sauce might be the next product in short supply. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.

Inflation soars as oil fuels price hikes

Consumer prices growth spiked in May as another surge in oil prices spurred inflation higher across the U.S. economy, according to data released Friday by the Labor Department. 

• The Labor Department’s consumer price index (CPI), a closely watched gauge of inflation, rose 1 percent last in May alone and 8.6 percent in the 12-month stretch ending in May. 
  
• Inflation landed far higher than the 0.7 percent monthly inflation rate projected by economists and jumped rapidly from a 0.3 percent monthly increase in prices in April. 
  
• The annual inflation rate also rose from 8.3 percent in April, where economists expected it to remain last month, to 8.6 percent. May’s annual inflation marked the fastest yearly growth in prices since inflation hit 8.9 percent annually in December 1981.

“Inflation is hitting not only the volatile food and energy categories, which themselves look to persist at high levels, especially food, but has moved deeply into services and shelter costs, while remaining high in goods categories we thought were cooling off,” said Robert Frick, chief corporate economist at Navy Federal Credit Union, in a Friday analysis. 

Sylvan breaks it down here. 

DRILLING DOWN

Biden bashes big oil: ‘Exxon made more money than God this year’ 

President Biden on Friday called out Exxon for raking in large profits while addressing high inflation and calling on Congress to act to tackle it. 

“Why don’t you tell them what Exxon’s profits were this year? This quarter? Exxon made more money than God this year,” he said in remarks at the Port of Los Angeles. “Exxon, start investing. Start paying your taxes.”

• Biden has called on Congress to pass tax reform to make the wealthiest Americans and big corporations pay what he argues is their fair share as a way to reduce inflationary pressures.  
  
• His remarks follow the release of data from the Labor Department earlier on Friday that showed the consumer price index rose 1 percent last month alone and 8.6 percent in the 12-month stretch ending in May. 
  
• Biden also took a stab at the shipping industry and major shipping companies on Friday. He called on Congress to pass a bill this month to cut shipping costs as another way to lower the price of goods. 

He said nine major ocean line shipping companies, which make up three consortiums, have raised their prices by as much as 1,000 percent, and Biden called on Congress to crack down on these corporations. 

“Every once in a while something you learn makes you viscerally angry, like if you had the person in front of you, you’d want to pop them,” he said, referring to the corporations. 

“Let those nine foreign shippers understand, the ripoff is over,” he said. 

The Hill’s Alex Gangitano has more here. 

Stocks fall sharply on inflation news

Stock markets fell sharply Friday on news that inflation is continuing to rise, hitting a 40-year year high of 8.6 percent. 

• The Dow Jones Industrial Average of major U.S. stocks fell nearly 2.75 percent. The S&P 500 index fell 2.91 percent, and the technology-heavy Nasdaq dropped more than 3.5 percent. 
  
• The bottom fell out of markets as a result of the latest inflation data from the U.S. Department of Labor. The rise constitutes a major blow to investor confidence, since it shows that prices following the onset of the pandemic have yet to hit a ceiling and could continue to rise. 

Tobias Burns has more here.

NO TEST NEEDED

CDC drops testing requirement for international flights 

The Biden administration on Friday announced that the Centers for Disease Control (CDC) will no longer require international U.S.-bound travelers to show a negative COVID-19 test as of Sunday.

The CDC said that the requirement is no longer necessary at this time thanks to the widespread availability of vaccines and treatments.  

The decision follows a lobbying blitz by travel and tourism interests, which have pressed the White House for months to lift the requirement through a series of meetings, letters and opinion pieces.

They argued that the rule was hurting demand for travel and noted that other countries, such as the United Kingdom and France, had already dropped similar restrictions.  

• The travel industry pitched the Biden administration on the potential economic growth of dropping the testing requirement, estimating that it would increase travel spending in the U.S. by 12 percent. 
  
• Airlines, travel agencies and hotels said this week that the testing requirement was causing travelers to avoid the U.S., or in some cases fly to Canada or Mexico and enter the country by car.  

Karl has more here. 

Good to Know

Inflation is on the rise, putting a pinch on consumers, unnerving Wall Street and creating heavy political headwinds for President Biden and Democrats in this fall’s midterm elections. 

Prices spiked again in May as another surge in oil prices helped force the consumer price index (CPI) up 1 percent for the month and 8.6 percent over the 12-month stretch ending in May, according to the Labor Department. 

Here’s our list of some of the items that rose the most from May 2021 to May 2022.   

Here’s what else we have our eye on: 

• The National Labor Relations Board (NLRB) has denied a request by Amazon to close off public access to a hearing on the validity of a union’s historic win at a Staten Island warehouse. 
  
• The Senate Foreign Relations Committee on Thursday easily passed a resolution pressing NATO to quickly admit Finland and Sweden, a sign of bipartisan agreement about pushing back on Russian aggression.  
  
• Federal investigators are expanding their investigation into potential safety risks of Tesla’s Autopilot feature. 
  
• Health officials announced on Friday that the White House has ordered 500,000 more doses of a vaccine believed to be effective against monkeypox. 
  
• Mediaite: “Former Obama economist Jason Furman, after the latest record inflation numbers, said the U.S. economy is ‘not in a sustainable place right now.’” 
  
  

AND FINALLY: Check out The Hill’s photos of the week.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.

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