US inflation skyrockets, piling pressure on Biden
A shopper walks past a storefront window at an outlet mall in Rehoboth Beach, Del. Biden, whose popularity has taken a hit as prices surge just months before November's midterm elections, has made fighting inflation his top domestic priority but is finding he has few tools to directly affect prices. "I'm doing everything in my power to blunt Putin's price hike and bring down the price of gas and food," he said Friday while speaking at the Port of Los Angeles. "We're better positioned (than) just about any country in the world to overcome the global inflation we're seeing and to take the next step towards forming a historic recovery. The president has tried to hammer home his optimistic message about economic progress in the wake of the pandemic, including rapid GDP growth and record job creation, while pressing Congress to take action to lower costs on specific products. Biden cited releasing 30 million barrels of reserve oil and repeated his call to approve legislation to go after firms such as shipping companies that are taking advantage of limited competition to impose steep price hikes.
But he acknowledged the rising inflation was a severe problem, saying in an earlier statement the United States "must do more -- and quickly -- to get prices down. The new data dealt a crushing blow to Biden's efforts, as the consumer price index (CPI) jumped 8. Prices continued to rise last month for goods including housing, groceries, airline fares and used and new vehicles, setting new records in multiple categories, according to the Labor Department report. Some economists expected the easing of pandemic restrictions to cause a shift of US consumer demand towards services and away from goods, which they said would ease inflation pressures, but prices for services increased as well. "The price of fuel oil and natural gas is working its way through the economy," Biden economic advisor Brian Deese told CNBC. "We're calling on Congress to move on shipping legislation that would bring down the cost of moving goods overseas.
The United States has come roaring back from the economic damage inflicted by the Covid-19 pandemic, helped by bargain borrowing costs and massive government stimulus measures. But with the pandemic still gripping other parts of the world, global supply chain snarls have caused demand to far outstrip resources. Food and fuel prices have accelerated in recent weeks since the Russian invasion of Ukraine sent global oil and grain prices up, and American drivers are facing daily record gas prices, with the national average hitting $4. The University of Michigan consumer sentiment index -- which measures how American consumers feel about the economy, personal finance and business and buying conditions -- fell sharply Friday from 58. The Federal Reserve has begun raising interest rates aggressively, with another big hike expected next week, and more ahead in coming months as policymakers attempt to combat inflationary pressures without triggering a recession. The CPI surge "raises the probability of even more aggressive Fed rate hikes to tamp down on inflationary expectations," said Mickey Levy of Berenberg Capital Markets, adding that a pause in rate hikes in September is "looking increasingly unlikely.
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