Fed on way to bigger action as inflation soars in US

The Fed is expected to increase interest rates as the consumer prices in May hit a new high, jumping 8.6 percent, topping what the economists thought was the highest in March, AFP reported.

The soaring inflation is increasing the woes of American householders and challenging Joe Biden's presidency.

As the Russia-Ukraine war continues to pressure global food and fuel prices and Covid-19 lockdowns in China create supply chain uncertainties, the inflationary pressures may take much longer to ease, say analysts, the report said.

Though the US central bank has already signalled a much bigger increase in benchmark borrowing rates this week and next month, analysts think the Fed may have to be more aggressive, adding that it may increase the risk of the economy getting into recession.

The latest report on inflation ahead of the Fed's policy meeting on Tuesday and Wednesday also puts off hopes of cooling down in September just before the key congressional elections, where Biden's Democrats are widely expected to face setbacks.

Prices of groceries, air travel, housing and new and used vehicles have continued to rise, setting new records, according to Labor Department data.

According to the data, energy has skyrocketed by 34.6 percent in the past one year, the fastest since 2005, food 10.1 percent, fuel oil price doubled rising 106.7 percent, the largest jump since the CPI was first recorded in 1935.