When the new data on inflation comes out Wednesday, the administration of President Joe Biden is preparing to go into damage control.
The administration is returning to calling the expected higher inflation numbers in the Consumer Price Index December report “transitory,” according to Axios, as they did earlier in the year to abate fears the numbers are marking a much longer trend upward.
They want to put the expected 7% increase for the year into the context of worldwide prices and the 5% increase in the Eurozone, Axios reported.
“We expect the print to be firm, as we have seen in the past few months,” Michael Pyle, the chief economic adviser to Vice President Kamala Harris, told Axios. “But we expect the trend lines, as we roll into 2022, to turn toward deceleration.”
Investors are unsettled the higher inflation rate could lead the Federal Reserve to increase interest rates to compensate for the increase, Reuters reported Monday.
The markets were “muted” Monday amid fears of the COVID-19 pandemic cutting consumer spending at the same time the Federal Reserve hikes rates and slows the “cheap” cash flow, according to the report.
Another concern for the administration is the economy is rapidly rising to the top of the mind for voters as the nation moves into the midterm election season, which could spell doom for Democrats trying to maintain narrow majorities in the House and Senate, as well as causing Biden’s sinking poll numbers to plummet further, The Washington Post reported Dec. 29.
“Regardless of how you look at it, inflation is going to be with us for a good period of time,” Joe Brusuelas, chief economist at global accounting and finance firm RSM, told the Post.
Making matters worse, the pandemic and ongoing supply chain issues are keeping demand for some products high and the supply low.
Gasoline and food products, which impact most voters on a daily basis, are still rising, in some cases, at record levels.
According to the report, prices in November rose at the fastest rate in four decades, jumping 6.8% over the previous year.
American Farm Bureau Federation President Scott Bennett told the Post, at some point, people will just stop eating beef because of the high price.
“It’s concerning to see the price of beef at the grocery store,” he said. “At what point does it get that beef just isn’t sold because the rent’s too high? Beef competes with poultry and pork.”
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