Jen Psaki, the White House Press Secretary, revealed this week that the new information coming out about inflation shows signs that it will be “extraordinarily elevated.” This is on the heels of data that indicated we are seeing a 40-year high of 7.9 percent inflation this past month.
Psaki said, “We expect March CPI headline inflation to be extraordinarily elevated due to [Russian President Vladimir] Putin’s price hike, and we expect a large difference between core and headline inflation reflecting the global disruptions in energy and food markets.”
One reporter from NPR, Asma Khalid, challenged Psaki on the administration’s effort to blame Putin’s invasion of Ukraine for the record-setting numbers on inflation. Khalid said that others are saying that the inflation predated the war in Ukraine.
Psaki admitted that there has been talking about inflation long before the invasion, but there has been about a 25% increase in gas prices since the start of the war. She said that energy prices are a big driver of inflation information.
The record inflation numbers are a political hurdle for the Democratic Party. They not only have the White House, but they control both the Senate and Congress. So as the country races toward the midterm elections this November, the stakes are high.
According to the monthly Consumer Price Index, the average cost of goods and services increased by 7.9% in February compared to one year earlier. That report only included the first couple of days of the Russian invasion.
So the new data that comes out this week will give the full picture of the effects of the war in Ukraine. In January, annual inflation was 7.5% higher than the year before. This number went against what President Biden has predicted the number would be. He said inflation would fall because the White House blamed the rising prices on factors linked to the COVID-19 pandemic.
At that time, Biden said that the number in December was 6.8% annual inflation and that would be the “peak” number. Back in July, Biden said that the higher inflation was just temporary when it was just 5%.
So Biden’s record on having a handle on what is coming in our economy has not been good.
In March, President Biden signed the $1.9 trillion American Rescue Act. This kept state and local governments from failing and gave $1,400 stimulus checks to most Americans. The White House extended a $300 weekly unemployment supplement and raised the annual child tax credit to $3,000 to $3,600 per child. This increases the previous amount which was just $2,000.
In November of last year, Biden signed a new $1.2 trillion infrastructure bill. The Congressional Budget Office said that this would add $256 billion to the federal deficit. The president argued in favor of the legislation saying that ultimately it would lower inflation by improving the transportation of consumer goods.
When NBC News host Lester Holt challenged Biden’s words about inflation being temporary, the president called him a “wise guy.”
“I think it was back in July, you said inflation was going to be temporary. I think a lot of Americans are wondering what your definition of temporary is,” Holt said.
“Well, you’re being a wise guy with me a little bit,” Biden said. “And I understand, that’s your job.”
President Biden tried to pass his $2.2 trillion Build Back Better Act, but it was killed by the Senate with members citing inflation as the cause.
When will the president and his administration get a handle on what is really happening with inflation? Probably not before there is a landslide of GOP victories in the midterms.