Senator John Baraso, R-Wyo., Discusses how Americans are affected by 40 years of inflation in the Biden administration.
Economists are looking for evidence that inflation has peaked and high prices are finally starting to fall, but are unlikely to find very good news in a key report to be released on Friday.
The labor ministry released its long-awaited report on the consumer price index on Friday morning, providing a new perspective on how hot inflation was in May. Economists expect the measure, which measures a basket of goods, including petrol, healthcare, groceries and rents, to show that prices rose 8.3% in May from a year earlier, unchanged from April but still close to 40. -annual peak, celebrated in March. On a monthly basis, inflation is expected to increase 0.7%, well over 0.5% registered the previous month.
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“Inflation is out of control and will be for some time as the sources of inflation are ingrained: too much easy money, a clogged supply chain and rising wages caused by labor shortages,” said Dan North, a senior economist at Allianz Trade. North. America.
Inflation is rapidly reducing the purchasing power of Americans, undermining the sharp increase in wages that workers have seen in recent months. The jump in prices has also become a political liability for President Biden, who has seen his rating fall in favor of rising spending.
IN the White House it is already in a state of damage control ahead of the latest inflation data, with employees publicly preparing for a new grim reading after months of public downsizing of rising spending.
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“We expect headline inflation to rise,” White House spokeswoman Karin Jean-Pierre told reporters on board Air Force One on Wednesday. “And we expect the war in Ukraine to have some effect on core inflation, especially when you look at things like plane tickets and the effect of higher aircraft fuel costs.
Administration officials are increasingly trying to contain voter outrage over poor consumer prices, stressing that President Biden is maximizing his efforts to reduce inflation ahead of the November midterm elections, which could be a bloodbath for Democrats. Biden is expected to visit the port of Los Angeles after the release of the latest data on Friday, during which he is expected to highlight efforts to reduce prices.
A customer buys products at the Cardenas Market on June 8, 2022 in San Rafael, California. (Photo by Justin Sullivan / Getty Images) / Getty Images)
The president blamed higher prices for bottlenecks in the supply chain and others pandemic-induced disturbances in the economy, as well as the Russian war in Ukraine. Most economists now agree that unprecedented levels of government stimulus and stronger-than-expected recovery from the pandemic have also played at least some role in exacerbating the price spike.
The report will also have major implications for the Federal Reserve, which is tightening policy at the fastest pace in decades as it seeks to cool consumer demand and reduce uncontrolled inflation. Politicians raised the base rate by 50 basis points last month for the first time in two decades, and almost promised that interest rates of similar magnitude would rise in June and July.
May’s report could increase the chances of more Fed hawks in the coming months.
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“The Fed is far, far behind the inflation curve,” North said. “The Fed has made a mess of itself, as it takes three to five quarters for monetary policy changes to take effect – they should have started a year ago.
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