After admitting recently that her predictions on inflation were inaccurate, Treasury Secretary Yellen said on Thursday that the latest data from the U.S. Bureau of Labor Statistics on the rising cost of food and fuel were unacceptable.
Speaking during a press conference in Bali before the G20 finance minister’s meeting, Yellen reflected on the Consumer Price Index (CPI) report that was released on Wednesday.
“Inflation is unacceptably high, and that’s something that’s evident from Wednesday’s report,” Yellen said. “And I believe it’s appropriate that it’s our top…it should be the top priority to bring inflation down.”
Yellen’s comments came after the latest CPI data showed how inflation spiked by 9.1% in June, the highest in more than 40 years. The figures also showed that the cost of gasoline rose by 11.2% from the previous month, and almost 60% compared to the same time last year.
The Treasury Secretary also told reporters on Thursday that the White House is hoping to provide relief for American households through a reconciliation bill, currently being negotiated with moderate Democratic Senator Joe Manchin that she says will reduce prescription drugs and release even more oil from the nation’s emergency stockpile.
Perhaps more likely to bring down prices, however, is a rumored plan by the Federal Reserve to once again raise interest rates – this time by an entire percentage point.
Federal Reserve Governor Christopher Waller said on Thursday that if the data continues to show rising prices, the central bank could consider raising interest rates by as much as 1.25 percentage points.
“I believe appropriate interest rate policy brings the target range up to 1 to 1.25 percent early in the summer,” Waller told an audience at the University of California.
Waller also said that once the rate hikes are complete, further increases would remain on the table if inflation continued to rise.
By raising interest rates and making it more expensive for consumers to borrow, the Federal Reserve hopes that demand for consumer goods will go down – therefore reducing prices and cooling the economy.
Biden Says Data “Out Of Date”
Likely aware of how damaging the latest inflation figures are to his party’s chances in the upcoming midterm elections, President Joe Biden set out to quell public outrage by claiming that the data is out of date.
In a statement, the president noted that “energy alone comprised nearly half of the monthly increase in inflation.”
“Today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices, that have reduced the price at the pump by about 40 cents since mid-June,” Biden also said, adding that the minor savings people have seen at the pump are “providing important breathing room” for American families.
In attempting to calm fears of rising prices, however, the president may have set himself a trap.
If July’s figures don’t come down when the next Consumer Price Index report is released in August, he won’t have any excuses left – and the midterms will be just three months away.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.