Price increases were extensive, suggesting that inflation may not be near its peak: Energy prices rose 7.5% in June from the previous month, and are up 41.6% from last year. Gasoline, on average, costs 59.9% more than it did one year ago and 11.2% more than it did in May. The food index, meanwhile, climbed 1% in June, as consumers paid more for items like cereal, chicken, milk and fresh vegetables.
In December, when inflation was still at 6.8%, Biden told reporters that “it’s the peak of the crisis” and, “you’ll see it change sooner, quicker, more rapidly than people think.”
The president’s comments at the time came several days after Federal Reserve Board Chair Jerome Powell told Congress that “factors pushing inflation upward will linger well into” 2022.
Powell’s testimony followed months of the White House painting the skyrocketing inflation as “transitory” and predicting it would come back down in 2022. The numbers have continued to rise, however, and the Federal Reserve has been forced to take a more hawkish approach by raising interest rates. Last month, in the third interest rate hike of 2022, the Fed raised interest rates by 75 basis points, the largest rate hike since 1994.
After Powell’s comments about inflation late last year, then-White House press secretary Jen Psaki refused to walk back the transitory claims, saying, “it doesn’t really matter what you call it” and that inflation “will subside next year.”
On Monday, White House press secretary Karine Jean-Pierre also downplayed the forthcoming Labor Department report, calling the data “backwards-looking” and “out of date,” noting that energy prices have come down from their peaks “and are expected to fall further.”
The White House continues to blame the price spike on the COVID-19 pandemic and ongoing supply-chain issues, as well as the Russia-Ukraine crisis driving up energy costs, while Republicans have blamed Biden’s green energy agenda for hampering domestic oil production and his $1.9 trillion American Rescue Plan for over-stimulating the economy.
On Monday, Biden was criticized by Republicans for blaming them for the country’s economic problems after he tweeted, “Republicans are doing nothing but obstructing our efforts to crack down on gas-price gouging, lower food prices, lower healthcare costs, and hopefully, soon, lower your prescription drug costs. This is not right. And that’s why this election is going to be so darn important.”
Meanwhile, the Federal Reserve is expected to raise interest rates again, fueling concerns it could spark a recession.
“With the hot month-over-month and year-over-year numbers coming in as they have, this tells the Federal Reserve it has more work to do with higher interest rates to eventually achieve its mandate of stable prices, or lower inflation, in this case,” Bankrate.com senior economic analyst, Mark Hamrick said in a statement provided to Fox News Digital. “Look for another rate increase of as much as 75 basis points at the FOMC meeting at the end of this month.”
“A force supporting inflation has been the mismatch between demand and supplies of goods (and some services) as well as the strong job market,” he said. “The Federal Reserve has resolved to reduce demand, to bring it more in line with supply, through rate hikes. Federal Reserve officials have expressed confidence, as they must, that rising rates won’t induce a recession. Fingers crossed on that front.”