US inflation back to 40-year high.
Published on 11.6.2022 by Epoch Times with AFP
Consumer prices resumed their escalation in May in the United States, hitting a new 40-year high, and US President Joe Biden has called for more, and faster, to be brought under control. inflation.
Consumer prices jumped 8.6% year on year, from 8.3% last month, according to the Consumer Price Index (CPI) released Friday by the Labor Department. The rise reached 1.0% over one month after +0.3% in April.
“We need to do more – and quickly” to slow inflation, Joe Biden said in a statement, recalling that it was his ” economic priority”.
These figures are bad for Joe Biden a few months before a crucial electoral deadline, which will see the renewal of a large part of the elected representatives of Congress.
“My administration will continue to do everything in its power to bring down prices for the American people”he promised, also calling on Congress – the US Parliament – to quickly pass legislation to stop shipping carriers from inflating prices.
Government, Congress, central bank: “ we all have our part to do to reduce inflation”he pointed out.
Joe Biden has said Americans are paying a ‘Putin tax’ on fuel and food, after May inflation figures were released, which were the highest in more than 40 years.
“We’ve never seen anything like Putin’s tax on food and gas at the same time,” he said in a speech in Los Angeles.
The war in Ukraine
He also attacked the American oil giants, so that they “do not use the difficulties created by the war in Ukraine as a reason to make matters worse for families with excessive profit taking or price hikes”.
The Republican opposition accuses the Democratic president’s economic policy of being inflationary: “in Joe Biden’s America, basic necessities have luxury item prices”according to the chairman of the Republican National Committee (RNC), Ronna McDaniel.
Housing, gasoline, plane tickets, food, new and used cars, but also medical care, clothing, the increase was general, dampening hopes of a lasting slowdown in inflation, which began timidly in April.
“The higher inflation numbers reflect a continued confluence of factors”underlines Kathy Bostjancic, chief economist for Oxford Economics.
Supply difficulties, which began with the Covid-19 pandemic, have driven prices up around the world, a movement accentuated in the United States by a shortage of workers, while generous financial aid from the government stimulated demand.
The war in Ukraine has exacerbated the phenomenon, driving up gasoline and food prices.
Inflation compared to May 2021 is thus 34.6% for energy – the largest increase since September 2005 – and 10.1% for food – the largest increase since March 1981.
+62% for gasoline prices over one year
While Americans are very dependent on their car, and often favor fuel-guzzling models, gasoline prices are breaking new records every day, reaching an average of 4.986 dollars per gallon (or 4.55 liters) on Friday, against $3,073 a year ago (+62%).
It even boosted requests for assistance for fuel shortages by a third in April, according to data from the AAA motorist association, cited by the Washington Post.
Excluding energy and food, so-called core inflation, however, was stable over one month, at +0.6%, and even slowed down over one year, to +6.0%.
Key rate hikes in sight
This situation should convince the US Central Bank (Fed) to tighten its key rates further next week at its monetary committee meeting.
The institution is on the move, its main lever being to curb demand from consumers and businesses, via key rate hikes.
It has already raised them twice, by a quarter point and then by half a percentage point, to the range of 0.75 to 1.00%.
The fight against inflation could weigh on the US economy, even raising fears of a recession. Unemployment could rise again.
“Should we fear stagflation? »that is, a prolonged period of low growth and high inflation, asks Gregory Daco, chief economist of EY-Parthenon: “no, not in 2022, but the risks will be much greater in 2023”.