The Consumer Price Index (CPI) rose 9.1% between June 2021 and June 2022, meaning that inflation once again surpassed record highs, a Wednesday morning report from the U.S. Bureau of Labor Statistics showed.
The most recent year-over-year inflation figure exceeds the Dow Jones estimate of 8.8%.
Inflation refers to the percent change in the price level over a given period of time. The CPI tracks a hypothetical basket of goods and services that represents typical spending for an American household. Rises in the price level that outpace rises in wages imply that Americans are spending a greater portion of their income on goods and services.
Between June 2021 and June 2022, the price of food increased 10.4%, the price of energy increased 41.6%, and the price of new vehicles increased 11.4%, according to the Bureau of Labor Statistics.
“Enormous deficit spending of $2.5 trillion just in FY2021 and the first 8 months of FY2022 has meant more money chasing goods,” Heritage Foundation Research Fellow Peter St. Onge told The Daily Wire. “That federal spending competes with households, driving up prices by bidding away resources for government projects.”
Earlier this week, the Biden administration braced for the dismal inflation news — but argued that the June price data is somewhat outdated due to the possible easing of inflationary pressures, especially through lower gas prices. Indeed, prices at the pump have declined over the past several weeks after hitting $5.00 per gallon in early June. As of Wednesday, the national average gas price was $4.63, according to AAA.
“We expect the headline number, which includes gas and food, to be highly elevated, mainly because gas prices were so elevated in June,” White House Press Secretary Karine Jean-Pierre told reporters on Monday. “The President’s number one economic priority is tackling inflation. And looking ahead, there are a number of reasons why we expect those high prices to ease over the coming months.”
Yet arguments from the White House in early June posited that the United States economy is strong. “What I’m trying to say to you is that the economy is in a better place than it has been historically,” Jean-Pierre said at the time. “And so, we feel, here at this administration and other experts as well… we feel that we are in a good position to take on inflation. We are in a good position to really start really working on lowering prices.”
To contend with higher inflation, the Federal Reserve is discharging government bonds on its balance sheet and hiking interest rates — most recently, by a 0.75% increment that represented the boldest move to combat inflation in nearly three decades. The central bank’s target rate is now between 1.50% and 1.75%.
St. Onge added that loose monetary policy could still have lagging effects. “Even if lockdown distortions end, new money is being printed at a rate nearly 50% higher than pre-pandemic,” he remarked. “Meanwhile, since COVID began the money supply has been expanded by 40%. Most of that excess money was saved due to pandemic fear, but as savings normalize and flood back to spending it could, like a golf ball in a snake, drive prices yet higher.”