US inflation hits fastest pace since 1981

Prices in the US rose faster than expected last month, as rising energy and food costs pushed inflation to the highest rate since 1981.

The annual inflation rate rose to 8.6% in May, the Labor Department said, after easing in April.

The rising cost of living has been squeezing households and putting pressure on policymakers to bring the issue under control.

The US central bank has been raising interest rates since March.

Analysts had hoped that the moves were starting to work to cool economic activity, easing the price pressures. But the conflict between Russia and Ukraine, which has driven up the price of oil and commodities like wheat as it disrupts exports from the two countries, has made tackling the problem more difficult.

Price increases have spread throughout the economy, pushing everything from airline tickets and clothing to medical services higher.

"So much for the idea that inflation has peaked. Consumer prices blew past expectations - and not in a good way with the 8.6% annual increase the fastest in more than 40 years," said Greg McBride, chief financial analyst at Bankrate.com.

"Worse the increases were nearly ubiquitous. Just no place to hide."