US inflation hits 40-year high of 8.6% as food, gas and shelter costs rise

Inflation in the US rose unexpectedly last month to a fresh four-decade high of 8.6%, the labor department said on Friday.

The latest consumer price index (CPI) figures showed that the cost of living increased by one percentage point from April and was broad-based, with the indexes for shelter, gasoline and food being the largest contributors.

The news sent stock markets into a tailspin. The S&P 500 and Dow indices fell over 2% and the tech-heavy Nasdaq was down over 3.5%.

Last month the Fed announced its largest hike in interest rates since 2000, increasing interest rates by 0.5 percentage points, and economists are speculating the Fed may move to increase the pace of rises.