ST. PAUL — Consumer prices in the U.S. jumped 4.2% last month from April 2020, according to a new U.S. Bureau of Labor Statistics report, the largest 12-month increase observed in 13 years.
Similar increases were seen last month in the Midwest, where the price of goods was up 4.9% over the year. The region's last annual price increase of that magnitude occurred in August 2008, when it reported a 5.4% leap.
Over the month, prices are up 0.8% at both the national and regional levels, the bureau reported Wednesday, May 12.
Amid the country's continued economic recovery from the coronavirus pandemic, and inflationary fears surrounding plans increased federal government spending, University of Minnesota Professor of Economics Chris Phelan said in an interview that there is a risk in overreacting and under-reacting to the latest Consumer Price Index news.
"Inflation over the last probably 20 years ... it has been remarkably stable," he said. "And so now, we've got 4% year-over-year. Two months in a row of pretty high inflation in a world where it was pretty damn stable before that."
"Is it a shock? I don't know," he continued. "It's different."
Factors contributing to the overall increase included the rising costs of shelter, airline fares, recreation, motor vehicle insurance, and household furnishings and operations. They accounted for roughly 75% of the total over-the-month increase in the Midwest, according to bureau economist Cheryl Abbot, and just over half of the region's total increase over the year.
The 9% increase in car insurance prices over the year in the Midwest — a region which according to the bureau encompasses Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin — is somewhat misleading, according to Abbot. They are up from the reduced rates that many motorists benefited from as the pandemic depressed travel.
"I know that last year at this time, I was getting rebates on my insurance because we all were staying at home," she said.
Higher energy prices in the Midwest, meanwhile, made up 41% of the region's total annual increase, Abbot said, and are up 35.8% for the region over the year compared to 25.1% nationally.
Up 75.8% over the year, the region's annual increase in gasoline prices was also larger in April than the nation's, which increased 49.6% Over-the-month gasoline price increases measured 2% and 3.2% for the U.S. and Midwest, respectively.
The rising price of gasoline coincides with the advent of the annual travel season, according to Tom Hainlin, national investment strategist for U.S. Bank Wealth Management, and also reflects that more people are driving to more places, unlike earlier in the pandemic.
"It's not just driving to the cabin," he said in an interview.
Food prices increased 0.4% in the Midwest over the month in April and 2.1% over the year, which Abbot said was a "relatively tame rate of expansion." They increased at more or less the same rate nationally.