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Inflation Surpasses Forecasts Ahead Of Midterm Elections In Bad Omen For Democrats

   DailyWire.com
US President Joe Biden speaks at the former Brayton Point Power Station in Somerset, Massachusetts, US, on Wednesday, July 20, 2022. Biden announced executive action to confront climate change, including plans to steer federal dollars to heat-ravaged communities, though he's holding off for now on an emergency decree that would allow him to marshal sweeping powers against global warming.
M. Scott Brauer / Bloomberg via Getty Images

The Consumer Price Index (CPI) rose 8.2% between September 2021 and September 2022, according to a Thursday report from the Bureau of Labor Statistics, surpassing expectations despite harsh contractionary policy from the Federal Reserve and boding poorly for Democratic prospects in the midterm elections.

The month-to-month increase of 0.4% exceeded analysts’ forecasts, while core inflation — which factors out the more volatile food and energy categories — reached 0.6% against an estimate of 0.4%. Despite energy costs falling in some categories, a 0.8% surge in food prices and a 0.7% increase in shelter prices contributed to the headline number.

“Given elevated costs for food, home heating, and health care, the budgets of many may remain constrained next year,” Bankrate senior economic analyst Mark Hamrick said in a statement provided to The Daily Wire.

The Dow Jones Industrial Index fell 1.7% as trading began on Thursday morning, while the Nasdaq and the S&P 500 fell 3% and 2.2%, respectively.

Year-over-year inflation in September was essentially unchanged since the previous month’s reading of 8.3%. Lower energy costs produced a moderation from the 9.1% inflation rate in June and the 8.5% rate in July, although gasoline prices have since returned to an upward trajectory.

Policymakers at the Federal Reserve had raised target interest rates by 0.75% last month, a move which followed two identical hikes in June and July, in an attempt to relieve elevated inflationary pressures. The continually elevated price levels may prompt further action.

“The Federal Reserve continues to see a bright green light with respect to future interest rate increases,” Hamrick added. “Based on the latest snapshots of inflation, they believe the target range for the federal funds rate must go higher from here. There’s no pivot yet in sight, only a push to higher ground.”

Central bankers had initially pegged a near-zero target interest rate and acquired government bonds to stimulate the economy during the lockdown-induced recession. Many leading economists have criticized the central bank amid the return to a contractionary monetary regime, claiming that officials who were slow in their response to rising price levels over the past two years are now inflicting undue harm through their zeal to combat inflation.

In remarks delivered earlier this week, Federal Reserve Vice Chair Lael Brainard said that monetary policy “will be restrictive for some time to ensure that inflation moves back to target.” Federal Reserve Chair Jerome Powell similarly promised that officials intend to slash inflation to 2%, the rate largely maintained by the central bank for the past three decades, and emphasized that the institution must revive its mandate to guarantee stable price levels.

President Joe Biden has repeatedly deflected on his administration’s role in rising price levels through the passage of multiple spending packages. The economy and inflation are key issues among voters preparing to cast ballots in the upcoming midterm elections, with 84% considering the former to be a top factor on their minds. The Republicans lead the Democrats by a 16% margin and a 19% margin with respect to trust in handling the economy and inflation, respectively, according to a poll from ABC News and The Washington Post.

“The inflation picture is now essentially set ahead of midterm elections,” Hamrick added. “If looked at exclusively, which broadly it is not, the news isn’t helpful for Democrats controlling Congress.”

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