White House braces for latest US inflation surge

White House braces for latest US inflation surge

By

Washington: As the government’s upcoming data is expected to show that U.S. prices will rise or even higher, President Joe Biden is trying to downplay the data and highlight recent improvements that the report did not capture.

The US Department of Labor will release its November Consumer Price Report on Friday. Analysts expect the report to show that inflation has accelerated from a 30-year high set in the 12-month period that ended in October.

The inflation wave is a political liability for Biden, who has seen his public approval ratings sink as prices have spiked, while the Republican opposition has used it to argue against his economic policies.

The president attempted to get ahead of the data, releasing an unusual statement on Thursday saying the report will not encompass recent declines in prices of energy and used cars, two main drivers of the high inflation readings seen this year.

Biden noted that gasoline prices have begun to come down nationally since the latest inflation data was collected.

“The information being released tomorrow on energy in November does not reflect today’s reality, and it does not reflect the expected price decreases in the weeks and months ahead, such as in the auto market,” Biden said.

After the government reported that the Consumer Price Index (CPI) rose 6.2% in October compared to the same month last year, the president made fighting inflation a top priority last month, the largest annual increase since November 1990.

This surprised analysts and provided Republicans with ammunition against Biden’s landmark “Rebuild Better” plan, which will spend $1.8 trillion on improving social services and combating climate change, but in Congress Facing a difficult road, his Democratic Party controlled Congress by a narrow margin.

-Large quantity, slower speed-

Due to various factors, prices in the world’s largest economy have risen this year, including shortages of parts and workers, strong demand for goods, and the rebound of vaccines in industries that have been disrupted by the Covid-19 pandemic but are now recovering.

Economists predict that the CPI growth rate in November will slow down from the previous month, but the year-on-year growth rate may be higher than that in October.

The extent to which Biden should be blamed for soaring inflation is a controversial topic.

Mickey Levy, chief economist covering the Americas and Asia at Berenberg Capital Markets pointed to the supply bottlenecks, the Federal Reserve’s low interest rate policies and pandemic recovery legislation enacted under Biden and his Republican predecessor Donald Trump.

“The Biden administration fears the negative political fallout of the impact of higher inflation on households and is trying to defer the blame on special factors,” Levy said.

The White House has argued that its actions helped get the country back on its feet after last year’s economic collapse, citing steady declines in the unemployment rate and the number of people filing for unemployment assistance.

You may also like