Inflation kept its hold on the US economy last month, government data showed on Thursday, with a higher-than-expected jump adding to headwinds facing US President Joe Biden’s Democrats shortly before midterm elections.
Thursday’s consumer price report — the last before the Nov. 8 vote to decide control of the US Congress — showed US prices rose 0.4 percent last month compared with August, twice the 0.2 percent projected by analysts, with increases for food, housing and medical care weighing on consumers.
While annual inflation slowed slightly to 8.2 percent from 8.3 percent, according to the Bureau of Labor Statistics data, analysts expressed increasing concerns that pricing pressures have become more ingrained in the economy.
Photo: Reuters
Biden touted “some progress in the fight,” but admitted that “prices are still too high” and that “we have more work to do” — as the disappointing data set the stage for more aggressive rate hikes by the US Federal Reserve.
Calling the price of gasoline “still too high,” Biden said that he would have “more to say about that next week.”
The Fed has been walking a tightrope for months in trying to wrestle inflation down from the current 40-year highs — without triggering a damaging recession in the world’s largest economy.
In an interview with CNN on Tuesday, Biden acknowledged the possibility of a mild recession, but said he did not think it was likely.
Thursday’s data showed that core inflation, which strips out volatile energy and food prices, rose 0.6 percent last month, more than the 0.4 percent projected by analysts. The benchmark rose 6.6 percent for the year, a four-decade peak.
Other items that saw price increases last month included motor vehicle insurance, household furnishings and education. Items that posted decreases included used vehicles and apparel.
Republican candidates have blamed Biden for broad-based price increases as they seek to win back control of Congress from Biden’s camp — tying high gasoline prices to Democratic resistance to new oil and gas drilling and to the White House’s efforts to address climate change.
US Secretary of the Treasury Janet Yellen and other Biden administration officials have defended their policies, attributing price increases to supply-chain problems and other unforeseen events, such as the Russian invasion of Ukraine that has boosted prices for energy, wheat and other commodities.
The most recent data is certain to disappoint the Fed, which last month enacted its third straight increase of 0.75 percentage points as Fed Chair Jerome Powell acknowledged that there is not a “painless” way to bring inflation down.
However, Thursday’s data showed the Fed’s actions thus far have come nowhere near realizing the goal of 2 percent inflation over the long run.
The central bank has aimed to stop inflation before it becomes ingrained in the economy
Analysts said the disappointing report not only boosts the odds of another 0.75 percentage point hike next month, but also raises the chances for a supersized December rate hike, or for bigger increases down the road.
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