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KPMG chief economist Constance Hunter, Heritage Capital President Paul Schatz and David Nicholas of Nicholas Wealth Management on the latest consumer price indices, inflation, the Federal Reserve and current markets.
In the first six months of Biden’s presidency, rising inflation pressured businesses and families still reeling from the effects of the pandemic. That could be a problem for Democrats.
As Americans return to normal life and spending habits, Republicans are sounding the alarm about rising prices and blaming what they see as President Biden’s recovery agenda for wasteful spending.
Prices rose 0.6% month over month, faster than the 0.4% jump expected by analysts polled by Refinitiv.
Senate Leader Mitch McConnell, R-Ky., accused the US bailout plan, Biden’s $2 trillion COVID recovery package, for “both people who don’t want to work and raging inflation.”
And Republicans have already devised a strategy to send the inflation message to voters ahead of the 2022 midterm elections. axios reported that Rep. Jim Banks (R-Ind.), who heads the Republican Study Committee, wrote a memo on inflation to his GOP colleagues: “Of course they’re trying to spin the media and explain that it has nothing to do with their big-spending policies. . Which, as we know, is simply incorrect.”
“That’s why we need to tie inflation to Biden’s economic agenda and explain to voters how inflation is Democrats’ hidden burden on the middle class,” Banks continued.
US consumer prices rose 5% in May, the largest increase since August 2008, before the financial crisis hit, the Labor Department reported Thursday. The staggering rise in the consumer price index comes as demand from the resurgent economy outpaces supply chain output, as food producers and manufacturers scramble to make up for lost production time during the pandemic.
Motorists have certainly noticed it too, with a price increase of 46% for the whole year. The national average for gas is over $3.00 a gallon, according to to the American Automobile Association (AAA).
“Despite gas prices being historically low at this time last year, the average price for a gallon of gas is currently an astonishing $3.10. That’s the highest since 2014, the last time Joe Biden was in the White House,” House Minority Leader Kevin McCarthy recently wrote in a blog post. Some experts blame seasonal trends and rising demand as the world returns to travel, while others point to new oil and gas regulations.
Meanwhile, the average price of fresh chicken in supermarkets across the country rose 5.3% to $2.77 between September 2020 and May 2021, up from $2.63 in September, according to NielsenIQ data obtained by FOX. business.
CONSUMER PRICES INCREASE BY 5% ANNUALLY, PARTICULARLY SINCE AUGUST 2008
The average cost of fresh beef rose to $6.48, a price increase of 11.1% since September when the cost was $5.83. Sandwich bread also saw a price increase for the same period, up 4.4% to $2.62.
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As mask-wearing has been relaxed across the country, consumers can expect to pay more for select cosmetic items. Lip cosmetics in particular saw a 7.3% increase with an average price of $5.97 for May, up from $5.56 in September. Eye makeup went from $6.67 in September to $7.03, an increase of 5.4%.
The White House has maintained that inflation is transitory and will correct itself. But Clinton-era Treasury Secretary Larry Summers is concerned. In a Washington Post op-ed Titled “The Inflation Risk Is Real,” Summers warned progressives last month that inflation spikes “hurt the poor disproportionately,” pointing to history where inflation concerns led to GOP victories in 1968 and 1980.
“Higher minimum wages, stronger unions, higher employee benefits and stricter regulations are all desirable, but they all also drive up operating costs and prices,” Summers also wrote.
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