The numbers: The cost of living leaped in June by the largest amount since 2008 as inflation spread more broadly through the U.S. economy, raising fresh questions about whether the spike in prices will subside as quickly as the Federal Reserve predicts.

The consumer price index climbed 0.9% last month, the government said Tuesday. The cost of used cars accounted for more than one-third of the increase, but prices for food, energy, clothing, plane tickets and shelter also rose sharply.

The increase easily exceeded forecasts. Economists polled by The Wall Street Journal had estimated a 0.5% advance.

The rate of inflation in the 12 months ended in June climbed to 5.4% from 5% in the prior month. The last time prices rose that fast was in 2008, when oil hit a record $150 a barrel.

Another closely watched measure of inflation that omits volatile food and energy also rose 0.9% In June. The 12-month rate increased to 4.5% from 3.8% and stood at a 29-year high.

The core rate is closely followed by economists as a more accurate measure of underlying inflation.

Read: Higher U.S. inflation isn’t going away just yet. Here’s why

Big picture: The rapid recovery in the economy has had an unwanted side-affect: Higher inflation.

Businesses can’t get enough supplies or labor to keep up with surging sales, forcing them to pay higher prices for almost everything. In turn, they are trying to pass those extra costs onto customers.

Read: Job openings hit record 9.2 million, but workers aren’t easy to find

The Federal Reserve has insisted for months that widespread shortages will fade away once the U.S. and global economies return to normal.

Ditto for inflation. The central bank has repeatedly referred to the sharp increase in prices as “transitory” and predicted inflation would taper off toward its 2% target by next year, using its preferred PCE price barometer.

Yet even the Fed admits it was caught off guard by how high inflation has risen. There’s a risk inflation could stay higher for longer than it expected, according to minutes of the Fed’s most recent strategy session.

Read: Fed admits inflation rose much higher than expected, but it still insists price increases are temporary

So far most investors have been unruffled, though the latest CPI is likely to stoke fresh worries.

What they are saying? “The spike in inflation still looks to be primarily Covid-related and temporary as outliers continue to drive much of the upward push in prices,” said Nationwide senior economist Ben Ayers. “But the effects of the recent jump could linger for consumers for some time with above-average costs extending into 2022.”

“Is the ‘transitory’ debate over?” said senior economist Jennifer Lee of BMO Capital Markets. “The answer is no, the transitory debate is far from over. In fact, it got a little hotter.”

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.14%

and S&P 500
SPX,
-0.12%

were fell slightly in Tuesday trades.

The yield on the 10-year U.S. Treasury
TMUBMUSD10Y,
1.346%

note was little changed, however.

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