Biden says inflation report shows progress in slowing down runaway prices

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  • President Joe Biden on Wednesday cited the latest consumer inflation report as evidence that the price jump has begun to slow.
  • While he acknowledged that the economy has a long way to go, Biden said the latest CPI report shows that “we are making progress in slowing the rate of price growth.”
  • The president’s remarks came hours after the Labor Department said Americans paid 0.5% more for goods and services in December.
  • Biden’s remarks highlight what many economists say is evidence that inflation growth is peaking.

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President Joe Biden on Wednesday cited the new consumer inflation report as evidence that the price rally has begun to slow, but acknowledged that the economy has a way to go before US cost increases can reach a specific level. Look back on

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“Today’s report—which shows a significant reduction in headline inflation compared to the previous month, along with declines in gas prices and food prices—shows that we are slowing the rate of increase in prices,” the president said in a prepared statement. making progress.”

“At the same time, this report underscores that we still have more work to do,” he said, adding that “price increases are still too high and the family budget is squeezing.”

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The president’s remarks came hours after the Labor Department said Americans paid 0.5% more for goods and services in December. That increase drove inflation to 7% year-over-year, the highest 12-month price gain since 1982.

But Biden’s remarks highlight what many economists see as evidence that inflation growth is peaking. Prices rose 0.3% in August, 0.4% in September, 0.9% in October, 0.8% in November and 0.5% in December, according to the Labor Department.

Should this trend continue, the year-over-year high jump will diminish.

Although this downtrend does not indicate that prices are declining, it does indicate that the rate of increase in prices is falling. This would begin the process by which year-over-year inflation would return to the Federal Reserve’s 2% target.

Still, price hikes without a similar jump in consumer pay meant that many Americans couldn't afford as many gallons of gasoline, grape bunches, used cars and haircuts as they did a year ago. Runaway inflation makes voters unhappy as they feel their purchasing power is eroding.

The Labor Department said Wednesday that real average hourly earnings, which take consumer prices into account, rose 0.1% from November to December. But they fell 2.4% from the previous year.

Most economists, including Fed Chairman Jerome Powell, say the Covid-19 pandemic has caused the current fight against inflation. He and others say that the global supply chain has not been able to meet the strong demand for goods among consumers and businesses.

Lawmakers presented their complaints about inflation to Powell during a nomination hearing before the Senate Banking Committee on Tuesday. Biden chose Powell to serve a second term, leading the central bank.

The Fed chair told lawmakers, "We will need to use our tools to check inflation, to the extent they work on the demand side, while we expect some help from the supply side as well." Powell also indicated that the Fed will begin raising interest rates this year to control price increases.

The pandemic has closed factories, disrupted shipping routes and undermined corporate efforts to hire workers to ramp up production. The resulting inflation threatens to sway Democrats in the key 2022 midterm elections as voters make the economy their top priority and give Biden poor marks for dealing with it.

The president acknowledged those frustrations on Wednesday.

"Inflation is a global challenge, visible in almost every developed country as this pandemic emerges from the economic slowdown," he said. “The US is fortunate to have one of the fastest growing economies – thanks to the US rescue plan – that enables us to address price increases and maintain strong, sustainable economic growth.”

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