An ‘Ugly’ Inflation Report Upended Hopes That Price Gains Would Ease
Investors and economists had expected to see some moderation in inflation. Instead, prices accelerated again in May, delivering an unwanted surprise.
While many economists and some administration officials had expected prices to show some signs of cooling, they got the opposite: A re-acceleration in price growth that makes it more likely the Fed is going to have to slam the brakes on the economy as it looks to slow the fastest pace of inflation in 40 years....
The ...left-leaning...Economic Policy Institute in Washington wrote on Twitter that the report was “pretty ugly — and shows the pain workers and their families are experiencing.”
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The news dispelled the notion that inflation may already have peaked and poured more fuel on the Biden administration’s biggest domestic policy vulnerability, politically and economically, as midterm elections approach in the fall.
It also raised the chances that the Fed, which has already started raising borrowing costs to tamp down demand, will have to make a series of larger interest rate increases over the next few months.
The Fed has to. It has to. U.S. economic policy now--my fellow leftists will lynch me--must look after the 96.4% who are employed and are having their take-home pay effectively slashed by inflation, rather than keeping the rate, 3.6%, of the unemployed from rising. Yes, people are going to have to lose their jobs.
The Consumer Price Index data showed mounting evidence that the war in Ukraine was continuing to push the prices of food, gasoline, electric power and other staples higher. Inflation in services, like housing, remained high. Inflation in consumer goods — which administration officials had hoped was slowing as supply chain snarls are worked out in sectors like automobile manufacturing — surged anew after a spring slowdown. Costs for staples like eggs, meat and bread soared, with an index measuring the price of food at home registering its largest annual increase since 1979.
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“The truth is that inflation did not just sneak up on the Biden White House,” Representative Jason Smith of Missouri, the top Republican on the Budget Committee, said on Friday. “The warning signs were there all along.”
That is the truth. The warning signs were ignored. The inflation was a problem for an economy the size of the U.S. was ignored. The Bidens first response was "too big for inflation"; the second response was "inflation was a rich man's problem." Every used up, disproven, discarded Democratic talking point was revived.
