Inflation Rate Forecast for May

Just like other parts of the world, the United States is also struggling with increasing inflation rates. This increase in inflation rates forces governments to aggressively raise interest rates, which has consequences for many industries as well as consumers.

Although the interest rate increase in the United States is much better than in other countries, its consequences have started to be felt in the US economy, and we have also begun to see its effect on the purchasing power parities. As you all might already know, the main reasons for the increase in inflation rates all around the world are the pandemic and the problems in supply chain systems.

Although the United States doesn’t actively participate in the Russian war in Ukraine, it also has indirect effects on the US economy too.

Inflation Rates Will Ease in May

The Federal Reserve of the United States is optimistic about the ease in interest rates in May. However, economists believe that the increased prices will not go down although the inflation rate will start to back down.

In April, 428,000 new jobs were added, which is a great indicator that the economy is getting better every passing day. Moreover, it is believed that the United States will not fully recover from the effects of the pandemic until mid-July. This means that most people who lost their jobs during the pandemic will be able to find new jobs to support themselves.

Service sectors such as entertainment, retail, restaurants, and hotels are looking for new employees already with the ease of pandemic restrictions.

May’s Inflation Rate is Expected to Be Around 7.50%

Economists are highly optimistic that the inflation rate will be around 7.00 until the end of this quarter. Their forecast for the May inflation rate is around 7.50. However, some experts also claim that this is a too optimistic forecast, and the inflation rate cannot be under 8.00 until the end of May. On the other hand, they state that the inflation rate may be under 7.00 only at the end of this year.

Of course, such forecasts are based on improvements in the supply chain. Although none of the countries actively take part in the Russian war in Ukraine, a major event like this has indirect effects on many areas. We can see this indirect effect on the economies of countries. The uncertainty in the war still remains one of the biggest risks to inflation rates both in Europe and the US.