US inflation at 40-year high

US inflation at 40-year high

Consumer prices resumed their climb in May in the United States, breaking a new maximum in 40 years, and US President Joe Biden called for more, and faster, to control this high inflation.

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Consumer prices increased 8.6% year-on-year, from 8.3% last month, according to the Consumer Price Index (CPI) released on Friday by the Labor Department. The increase reached 1.0% in one month after +0.3% in April.

“We must do more, and quickly” to curb inflation, Joe Biden said in a statement, recalling that it was his “economic priority.”

These figures are bad for Joe Biden a few months before a crucial electoral deadline, which will see the renewal of a large part of the elected representatives of Congress.

“My administration will continue to do everything in its power to lower prices for the American people,” he promised, also calling on Congress, the US Parliament, to quickly pass legislation to prevent carriers from inflating prices.

Government, Congress, central bank: “we all have our part to do to reduce inflation,” he stressed.

Il s’en est également pris aux géants pétroliers américains, so that they «n’utilisent pas les difficultés créées por la guerre en Ukraine comme une raison d’aggraver les choses pour les familles avec des prises de benéfices excessives ou des hausses de Reward”.

“Exxon has made more money than God this quarter,” the US president joked then after a speech in the port of Los Angeles (California), again criticizing the tanker for not pumping more oil, which could lower prices, for the simple purpose of increasing your profits.

The Republican opposition accuses the Democratic president’s economic policy of being inflationary: “in Joe Biden’s America, basic needs are priced like luxury items,” according to the president of the Republican National Committee (RNC), Ronna McDaniel.

Housing, gasoline, plane tickets, food, new and used cars, but also health care, clothing, the increase was across the board, dimming hopes of a lasting slowdown in inflation, which began timidly in April.

“The higher inflation figures reflect a continuing confluence of factors,” said Kathy Bostjancic, chief economist at Oxford Economics.

Supply difficulties, which began with the Covid-19 pandemic, have pushed up prices around the world, a movement accentuated in the United States by a shortage of workers, while generous financial aid from the government stimulated demand.

The war in Ukraine has exacerbated the phenomenon, driving up gasoline and food prices.

Thus, inflation compared to May 2021 is 34.6% for energy, the highest increase since September 2005, and 10.1% for food, the highest increase since March 1981.

While Americans rely heavily on their cars and often favor fuel-guzzling models, gasoline prices break new records every day, averaging $4,986 per gallon (or 4.55 liters) per day. Friday, up from $3,073 a year ago (+62). %).

It even increased requests for assistance due to lack of fuel by a third in April, according to data from the motorists’ association AAA, cited by the Washington Post.

Excluding energy and food, the so-called core inflation, however, remained stable in one month, at +0.6%, and even slowed down in one year, to +6.0%.

This situation should convince the US Central Bank (Fed) to further tighten its interest rates next week at its monetary committee meeting.

The institution is on the move, its main lever being to curb demand from consumers and businesses, through key rate increases.

It has already raised them twice, a quarter point and then a half percentage point, to the 0.75-1.00% range.

Fighting inflation could weigh on the US economy, even raising fears of a recession. Unemployment could rise again.

“Should we fear stagflation?”, that is, a prolonged period of low growth and high inflation, asks Gregory Daco, chief economist at EY-Parthenon: “no, not in 2022, but the risks will be much higher in 2023.”

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