Inflation jumped to an annual rate of 8.6 percent in May, the U.S. Labor Department said Friday. That’s one of the loftiest levels since the stagflation days of the early 1980s — and the hot reading means mortgage rates are likely to keep rising in the near future.

“So much for the idea that inflation has peaked,” says Greg McBride, Bankrate’s chief financial analyst. “Consumer prices blew past expectations.”

The unexpected strength of inflation means the Federal Reserve is likely to keep raising rates this year in an effort to contain consumer prices. While the Fed doesn’t directly control mortgage rates, its policies do have an effect.

Ralph McLaughlin, chief economist at real estate technology firm Kukun, agrees.

“This morning’s news on inflation suggests that mortgage rates aren’t likely to fall any further and are actually likely to rise in the coming months,” McLaughlin says.

During the early part of the coronavirus pandemic, mortgage rates plunged below 3 percent. Rates are now up more than 2 percentage points since the summer of 2021, with inflation a major culprit. Huge stimulus packages fueled consumer spending and created demand for gas, cars and houses. Meanwhile, pandemic-spurred issues in the global supply chain created shortages of many goods. The resulting rising prices have prompted the Fed to take action.

“Inflation is much too high, and we understand the hardship it is causing,” Fed Chairman Jerome Powell told reporters after last month’s central bank meeting.

While the rate of inflation doesn’t directly determine mortgage rates, the two metrics are strongly correlated. Inflation — and the Fed’s response to rising prices — could be the most important factor driving mortgage rates in the coming months.