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Prices paid by U.S. consumers rose in May by more than forecast, extending a months-long buildup in inflation that risks becoming more established as the economy strengthens.

The consumer price index climbed 0.6% from the prior month after a 0.8% jump in April that was the largest since 2009. Excluding the volatile food and energy components, the so-called core CPI rose by a larger-than-forecast 0.7%, according to Labor Department data Thursday.

The gains were fairly broad and driven by steady growth in the costs of used vehicles, household furnishings, airfares and apparel. The median forecast in a Bloomberg survey of economists called for 0.5% gains in both the overall CPI and the core.

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Compared with the same month a year ago, the CPI jumped 5%, the largest annual gain since August 2008, though the figure remains distorted by the base effect. The comparison to the pandemic-depressed index in May 2020 makes year-over-year inflation appear stronger.

The core measure rose 3.8% from 12 months ago, the most since 1992.

However, underscoring the clear acceleration in inflation more recently, the CPI over the past three months has increased at a 6.9% annualized pace, the fastest since 2008.

The yield on the 10-year Treasury rose after the report, touching 1.52%. The dollar was little changed and stock futures were mixed.

Price pressures continue to build across the economy as businesses scramble to balance a rush of demand against shortages of materials and, in some cases, labor. Shipping bottlenecks, higher input costs and rising wages are challenges to companies looking to protect profit margins.

Robust Demand

Strong consumer spending on merchandise — in part driven by government stimulus — has led to growing orders backlogs and lean inventories. The lifting of pandemic restrictions, increases in vaccinations and a flurry of social activity are translating into more services demand — another propellant for inflation.

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The question economists and investors are wrestling with is whether these factors will have a temporary impact on inflation as the Federal Reserve expects or whether they will become more ingrained against a backdrop of massive fiscal and monetary policy support.

A slew of companies have raised prices or announced plans to do so, including Chipotle Mexican Grill Inc. and Reynolds Consumer Products Inc.

Even though orders and backlogs at Hooker Furniture Corp. are elevated, “we’re cautiously optimistic, considering the industry-wide supply chain logistics and raw materials shortages and inflation,” Chief Executive Officer Jeremy Hoff said on the company’s June 4 earnings call. “We believe we have mitigated these dynamics as much as possible through surcharges and price increases.”

A 7.3% jump in the cost of used cars and trucks accounted for about one-third of the increase in the overall CPI, while new vehicles rose the most since 2009.

Household furnishings advanced 1.3% in May from a month earlier, the largest gain since 1976.

Fed Chair Jerome Powell has said upward pressure on prices is likely to be temporary, noting in late April that “in an episode of one-time price increases as the economy reopens is not the same thing as, and is not likely to lead to, persistently higher year-over-year inflation into the future.”

Others disagree, citing trillions of dollars in fiscal support, the likely persistence of product shortages and rising labor costs. Bond market expectations for the pace of inflation over the next five years have been easing from a 15-year high last month but remain elevated.

While wage growth has blown past economists’ estimates in the last two monthly jobs reports, the rise in consumer prices has taken a sizable toll. Inflation-adjusted average hourly earnings declined 0.2% in May after a 0.1% drop in April, separate data showed Thursday. The drop in real earnings, if it persists, could prompt workers to ask for a bump in pay.

Shelter costs, which make up a third of the overall CPI, rose 0.3% after rising 0.4%.

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