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Consumers are paying more than they have in years

Pockets of the U.S. economy (housing and autos, for instance) are on fire — and consumers are having to pay more than they have in years, fresh inflation data today showed.

Why it matters: “Not everybody’s wages are going up fast enough to keep up with these price increases,” David Wessel, a senior fellow at the Brookings Institution, tells Axios.

  • In most cases, essentials — and the nice-to-haves — cost more now than before COVID-19 wrecked the economy.

What’s happening: Prices in May for floor coverings, tools and outdoor equipment, plus moving and storage, saw the biggest monthly spike in records that go back to 1957.

  • An index that tracks furniture prices jumped the most in 45 years.
  • And then there's used car prices, which rose more than 7% in one month alone — after a 10% gain the prior month.

The big picture: Prices rose 5% from May 2020, a time when costs drifted lower as the world shut down. It was the biggest annual spike since 2008 — though the monthly pace (0.6%) slowed from April's.

  • Blame the "supreme imbalance between supply and demand coming out of the pandemic," says Nationwide economist Ben Ayers.

What they're saying: Roughly half of the inflation rise came from autos, car rentals and airfares.

  • "[A] narrow range of categories are accounting for a majority of the advance, and their contribution is unsustainable," Bespoke Investment Group's George Pearkes tweeted.
  • Put plainly, these price spikes may not stick around.

The bottom line: “[O]nly apparel prices are lower, by around 4%, than they were on average in 2019,” says Cailin Birch, an economist at the Economist Intelligence Unit.

  • Prices for all other categories “have recovered … above (or in some cases well above) pre-pandemic levels.”

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