Biden admin and Fed policies are ‘primary drivers’ of inflation crisis: Former Philadelphia Fed president Former Federal Reserve Bank of Philadelphia president Charles Plosser criticizes the slow action of the Federal Reserve and urges new commitment to bringing down inflation is ‘sustained’ through the election season.
The Biden administration is already in damage control mode ahead of the newest inflation data out this week, which is expected to show another jaw-dropping figure as the price of everyday goods soared higher.
The Labor Department is releasing the highly anticipated consumer price index report on Wednesday morning, which is expected to show that prices surged 8.8% in June from the previous year — toppling the previous 40-year high of 8.6% notched in May. On a monthly basis, inflation is projected to have increased 1%, matching the rate from the previous month.
Although White House officials have not suggested that inflation peaked in June, they have argued that record-high gas prices are to blame for what will likely be another scorching-hot CPI reading — while noting that prices at the pump have since declined.
“Energy prices have fallen significantly from the prices included in the June CPI report,” Brian Deese, the director of the National Economic Council, and Cecilia Rouse, the chair of the Council of Economic Advisers, wrote in a White House memo released on Tuesday. “The June CPI data will largely not reflect the substantial declines in gas prices we’ve seen since the middle of June.”
Gas prices peaked at $5.01 per gallon in mid-June and are now hovering around $4.65, according to AAA. That is still about 50% higher than the average cost of fuel one year ago. With the decline in gasoline prices, the Biden team is arguing the June inflation data is “backwards looking” as it does not take into account the recent drop.
“June CPI data is already out of date,” White House press secretary Karine Jean-Pierre said Monday.
Economists expect the report to show that so-called core prices, which exclude the more volatile measurements of food and gasoline, climbed 5.8% in June, just shy of the 6% recorded in May, underscoring how strong inflationary pressures in the economy still are.
Inflation is rapidly diminishing the buying power of Americans, eroding strong wage gains that workers have seen in recent months.
The spike in prices has also become a political liability for President Biden, who has seen his approval rating slump in conjunction with rising costs. Administration officials are increasingly trying to contain voter outrage over runaway consumer prices by stressing that Biden is maximizing efforts to bring down inflation ahead of the November midterms, which could be a bloodbath for Democrats.
The president — who recently said that combating inflation is his “top domestic priority” — has blamed higher prices on supply chain bottlenecks and other pandemic-induced disruptions in the economy, as well as the Russian war in Ukraine, while Republicans have pinned it on Democrats’ massive spending agenda.
Most economists now agree that unprecedented levels of government stimulus, and a stronger-than-expected recovery from the pandemic, have also played a role in exacerbating the inflation crisis.