The Biden administration and Democrats will likely be put on the defensive over their spending bills and domestic economic policies following a report showing that inflation has soared to its highest level in decades.
According to the Consumer Price Index, released by the Labor Department’s Bureau of Labor Statistics on Wednesday, prices for everyday consumer goods rose a whopping 6.2 percent last month, “with President Joe Biden’s $1.2 trillion infrastructure plan expected to make things worse,” the Daily Mail noted.
Everything from food and gasoline to rent and health care costs have risen dramatically over the course of Biden’s 10 months in office after administration officials claimed earlier this year that inflation was “transitory.”
Gasoline prices, especially, have jumped: The average per-gallon price has climbed 59 percent since last year, and is up nearly 12.5 percent since September.
But food prices are rising fast too, the CPI notes, with the cost of steak climbing 24 percent year-over-year as well.
Overall, month-to-month, the CPI rose by 0.9 percent versus a 0.6 percent increase forecast by Dow Jones.
And while the core CPI was up by about 0.6 percent overall, that figure does not factor in food and energy prices, which are said to be volatile but which the vast majority of Americans must deal with on a daily basis. In that respect, core annual inflation rose by 6.2 percent, though Dow Jones had forecast an increase of about 4 percent.
The current rate of inflation is the highest since November 1990. It also makes the fifth straight month of inflation over 5 percent.
Economists believe that Americans will continue to experience inflationary pressures for the foreseeable future.
“I do think we’re moving into a new phase where inflation is broader and where things are going to get more intense,” Laura Rosner-Warburton, a senior economist at MarcoPolicy Perspectives, told The Wall Street Journal.
“Part of that reflects that [supply-chain] bottlenecks are not resolved going into the holiday season when a lot of purchases get made, and that economy is doing really well, so you have strong demand,” she added.
But at the same time, government figures show that Americans are incurring more household debt. The Federal Reserve released a report Tuesday showing that debt increased by $286 billion, now standing at $15.24 trillion overall in the third quarter of 2021. Debt leveled off during the pandemic.
“Mortgage balances, which are the largest component of household debt, rose by $230 billion and stood at $10.67 trillion at the end of September, reflecting fast-rising home prices,” the Daily Mail noted.
Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, told the WSJ she expects inflation to continue rising.
“The bigger picture is we’re likely to see inflation climb higher,” she said. “Things are going to get worse before they get better.”
Already companies are passing on their higher costs to consumers. The paper reported that about 53 percent of small businesses raised their prices in October on net, a level that has not been since the early 1980s, according to figures from the National Federation of Independent Business.
“It’s a never-ending loop—by the time you’ve implemented one price increase, you’re already ready to implement a new one,” Tom McTaggart, a pricing consultant and the founder of PricingAudit.com, told the Journal. “It’s like trying to hit a moving target while you’re standing on a moving platform.”
Sen. Joe Manchin, a moderate Democrat from West Virginia who has pushed back on the price tag of Biden’s economic agenda over inflationary worries, put the onus on the administration and his party to address the issue following the Labor Department’s latest CPI figures.
“By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse,” he tweeted Wednesday.
“From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day,” he added.
By all accounts, the threat posed by record inflation to the American people is not “transitory” and is instead getting worse. From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.
— Senator Joe Manchin (@Sen_JoeManchin) November 10, 2021
Earlier this month, Manchin expressed concerns that the massive spending bills “will impact an economy already flush with trillions of dollars of federal stimulus,” The Hill reported.
He also stated that he won’t support any legislation without “thoroughly understanding the impact it will have on our national debt” as he went on to caution about the risk of “hurting American families suffering from historic inflation.”