Consumer prices soared in 2021 in the United States, where inflation is at its highest for nearly forty years, according to figures released Wednesday, January 12 by the US administration. A major concern for Joe Biden, who could pay the price for this surge in the mid-term elections in November.
Americans had not known this for forty years. Inflation reached 7% in 2021, according to the consumer price index released on Wednesday by the Ministry of Labor. “The last time prices rose to such a high level was in 1982”, under Republican President Ronald Reagan, remind him Wall Street Journal.
“Even though prices exploded last year, they are still far from the historic highs reached in the early 1980s., remark CNN. By the spring of 1980, inflation had peaked at 14.8%. ”
Biden “could pay a political price” in November
This soaring cost of living nonetheless remains a major political problem for Democratic President Joe Biden, accused by the Republican opposition of having fueled inflation by adopting a stimulus policy to deal with the economic consequences of the pandemic. “The president and his advisers have predicted for months that inflation will only be transient and that this temporary problem will subside as the economy rebounds and supply chain problems ease,” underline the Washington Post. But the figures released Wednesday by the Ministry of Labor have called into question these optimistic predictions.
Currently, “The unemployment rate is low, wages are increasing and the stock market is healthy”, remind him Washington Post. “But with prices continuing to rise, Biden could be made to pay a political price in the November poll,” during which the Republicans could regain control of both houses of Congress. Especially since the “Price increases affect almost all consumer goods, from fuel and food to used cars and construction materials”.
The Fed “forced to act”
“This new jump in the consumer price index will inevitably have consequences” in the USA, remark for his part the Guardian. “The American central bank has certainly always tended to fear the risk of a deep recession rather than runaway inflation because it remains marked by the legacy of the Great Depression. But the Fed cannot ignore the risks of the price / wage spiral today and will therefore be forced to act. ”
The Federal Reserve may have to raise its key rates earlier and to a higher level than expected, in an attempt to curb inflation. However, some experts fear that “The rise in interest rates is not stifling the economic recovery”, note it Washington Post. Again, much to Joe Biden’s chagrin.