(Washington) Inflation continues to break records in the United States and recorded a new acceleration in January, a real pressure for households, recognized Joe Biden, who is trying to put out the fire and assured that the country would overcome this difficulty.
Updated yesterday at 2:49 p.m.
Consumer prices rose 7.5% in January year on year, according to the Consumer Price Index (CPI) released Thursday by the Labor Department.
This is more than the 7% recorded for the year 2021. We now have to go back to February 1982 to find such strong annual inflation.
Recognizing the “real pressure” suffered by American households, Joe Biden, for whom soaring prices are a major political handicap, assured in a press release that there were “also signs showing that we will overcome this challenge”.
“Food prices are up, we are working to bring them down,” said the Democratic president, during a speech on health care in Culpeper, Virginia, also promising to “work like crazy to bring them down. gasoline prices”.
He took the opportunity to once again praise the merits of his Build Back Better investment plan, paralyzed in Congress. These expenditures must, according to him, reduce the pressure on prices, but the Republican opposition and certain Democrats fear that this will further fuel the rise in prices.
“Childcare is a cost for millions of families. You still have to pay for your prescription drugs, […] Healthcare. Want to lower people’s cost of living? Help them in these areas, ”Joe Biden pleaded.
More expensive peanut butter
The White House had prepared minds on Wednesday for such figures, especially since the situation should not subside for a few months.
Almost all sectors are affected, from heating oil to used cars, including kitchen and dining room furniture, but also services, which have been shunned by COVID-19, such as sporting events or hotels and Holiday rents.
Even the essential peanut butter now costs much more.
Over one month, however, in January compared to December, inflation was stable at 0.6%.
Prices have been skyrocketing for a year, due to a range of pandemic-related factors, including supply chain issues, component and labor shortages.
The Republican opposition as well as economists believe that it is a direct consequence of the gigantic emergency plan of 1900 billion dollars that Joe Biden had voted last year in Congress.
“Americans are paying more and earning less because of Joe Biden’s failed agenda. Biden lied – his inflation is not ‘temporary,’” the Republican Party denounced in a statement.
This inflation is a “global phenomenon”, repeated Joe Biden’s economic adviser, Brian Deese, on Wednesday, who maintains that it will moderate when consumer spending shifts towards services rather than goods.
The Fed to the rescue
The Biden administration and the American central bank (Fed) have indeed assured for months that the movement would only be temporary.
From now on, in an attempt to slow down inflation, the White House is increasing its announcements. The goal: to allow products to arrive more quickly in American homes and businesses and to reduce pressure on prices.
After measures to speed up the unloading of ships in ports before Christmas, she wants to recruit more truck drivers and, in the longer term, repatriate the production of essential components such as semiconductors to the United States.
The Fed, for its part, can act on the other source of this price increase: strong demand from consumers and businesses. The most effective means at its disposal is to raise key interest rates, as this increases the cost of credit granted by commercial banks.
The Fed’s key rates, after spending two years in a range of 0% to 0.25%, should therefore be raised at the next meeting of the monetary committee, in mid-March.
“The Fed’s top priority is to control inflation,” said Kathy Bostjancic, economist for Oxford Economics.
According to her, these figures open the door to “a rate hike of 50 basis points” in March (0.5 percentage points), and not just 25 points, as anticipated by the Fed so far.