By Karen Stokes
The U.S. Labor Department report on Friday, June 10 indicated that the Headline consumer-price index (CPI), increased 8.6% in May from a year ago, up from 8.3% the prior month, marking its fastest pace since December 1981. Core inflation excluding food and energy rose 6%. Both were higher than expected.
On a monthly basis, consumer prices increased 1%, compared to a 0.3% rise the prior month.
The increase in headline inflation is a measure of the total inflation within an economy, including commodities such as food and energy prices which tend to be much more volatile and prone to inflationary spikes.
“What we understand is inflation is a challenge. Friday’s report underscores why the president is making inflation his top priority,” said Cecilia Rouse, Chair of the White House Council of Economic Advisers. “About half of the increase was due to food and energy and that can be tied back to Putin’s invasion in Ukraine.”
Global markets have suffered due to the war in Ukraine as well as supply chains that are still reeling from the pandemic.
“Two other aspects of what the president is doing, one is that the President has reduced the deficit this year more than any other president in history. With Congress he could increase taxes for the wealthiest Americans and the biggest corporations. It is another way to address prices,” Rouse said.
“Another one of the most important things this president can do is give the Federal Reserve the independence it needs to address inflation. The Federal Reserve has a dual mandate to hold prices and maintain full employment.”
“It’s very important, it’s in their domain that the Federal Reserve has the ability to do what it believes it needs to do in order to get inflation under control,” said Rouse.
Recently the Ocean Shipping Reform Act passed on a bipartisan basis. This will help lower costs for American retailers, farmers and consumers. It would cut costs for almost everything that is bought in the U.S., according to the Whitehouse.
“The President is focused on inflation, he understands the effect that it has on families,” Rouse said. “He does also believe it’s very important that we defend freedom in Ukraine and he’s been clear from the beginning that it would have some ramifications and he’s doing what he can which includes working with Congress to ensure that the Ukrainians have the resources they need to address the war.”