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(The Guardian) America's inflation storm continues as prices rise at rates not seen since the 1980s
The message from the May inflation data released earlier today is simple: prices are continuing to increase in the world’s largest economy, meaning Biden’s public support will likely suffer even more than it already has.
Inflation has proven to have a potently negative effect on the president’s approval, swamping it among a wide swath of the population, particularly when it comes to the economy.
The latest consumer price index data from the labor department is unlikely to change that dynamic. If anything, it could make it worse. Here are a few reasons why:
--Economists expected month-on-month inflation to accelerate compared to April and it did, but by one percent, which was a bigger rise than expected.
--That pushed prices compared to May 2021 up by 8.6 percent, its biggest gain since the 12-month period ending in December 1981.
--Most importantly, the year-on-year growth was evidence that the current inflation wave has not peaked, as some had hoped after the April data showed a deceleration in the price increases. Instead, the wave continues to rise, as this chart makes clear.
--Perhaps the most important takeaway from the data is that costs are accelerating for things American cannot avoid buying. Prices for groceries are up 1.4 percent compared to last month and 11.9 percent compared to May 2021. Gasoline prices have risen 4.1 percent from April and a whopping 48.7 percent compared to a year ago. Costs for Shelter — the category including rents one might pay for an apartment or house, and a particularly important contributor to overall inflation — are up 0.6 percent from last month and 5.5 percent compared to last year.
Biden has been trying to convince Americans the economy is better than it appears, pointing to much more positive trends in employment. But with the Federal Reserve committed to a campaign of potentially sharp interest rate increases to cut into inflation, the fear now is that the US economy is heading into a recession — a concern that has already triggered sharp selloffs on Wall Street.
The message from the May inflation data released earlier today is simple: prices are continuing to increase in the world’s largest economy, meaning Biden’s public support will likely suffer even more than it already has.
Inflation has proven to have a potently negative effect on the president’s approval, swamping it among a wide swath of the population, particularly when it comes to the economy.
The latest consumer price index data from the labor department is unlikely to change that dynamic. If anything, it could make it worse. Here are a few reasons why:
--Economists expected month-on-month inflation to accelerate compared to April and it did, but by one percent, which was a bigger rise than expected.
--That pushed prices compared to May 2021 up by 8.6 percent, its biggest gain since the 12-month period ending in December 1981.
--Most importantly, the year-on-year growth was evidence that the current inflation wave has not peaked, as some had hoped after the April data showed a deceleration in the price increases. Instead, the wave continues to rise, as this chart makes clear.
--Perhaps the most important takeaway from the data is that costs are accelerating for things American cannot avoid buying. Prices for groceries are up 1.4 percent compared to last month and 11.9 percent compared to May 2021. Gasoline prices have risen 4.1 percent from April and a whopping 48.7 percent compared to a year ago. Costs for Shelter — the category including rents one might pay for an apartment or house, and a particularly important contributor to overall inflation — are up 0.6 percent from last month and 5.5 percent compared to last year.
Biden has been trying to convince Americans the economy is better than it appears, pointing to much more positive trends in employment. But with the Federal Reserve committed to a campaign of potentially sharp interest rate increases to cut into inflation, the fear now is that the US economy is heading into a recession — a concern that has already triggered sharp selloffs on Wall Street.
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