The latest government inflation data showed that price pressures remained shockingly high in certain categories, with egg prices up over 70 percent in annualized terms while many food categories were up by double digits.
Prices of food at grocery stores rose 11.3 percent year-over-year while food in the “away from home” category like restaurants rose by 8.2 percent.
While many of the food price gains were more modest when looked at in month-over-month terms—margarine up 1.2 percent, bread up 0.2 percent, and ham up 5.2 percent—egg prices rose by a stunning 8.5 percent in monthly terms as well.
Egg prices have been under pressure due to a deadly bird flu that has decimated chicken flocks. While wholesale egg prices have retreated, that hasn’t yet trickled down to grocery stores.
Bankrate chief financial analyst, Greg McBride, told The Epoch Times in an emailed statement that there were a few brighter spots in the inflation report but overall it was far from satisfactory.
“The broad-based improvement needed to be seen in order to feel good about where inflation is headed is still lacking. The leading contributors continue to be categories that are staples of the household budget—food, shelter, electricity, natural gas, apparel, vehicle insurance, and household furnishing and operations,” he said.
‘Pure Gaslighting’
Still, the headline pace of inflation at 6.4 percent represented the seventh straight month of declines, prompting President Joe Biden to celebrate.Tommy Pigott, the Republican National Committee’s (RNC) rapid response director, reacted to Biden’s tweet by accusing the president of “pure gaslighting.”
While the headline pace of year-over-year inflation fell from 6.5 percent in December to 6.4 percent in January, the month-over-month pace accelerated sharply from 0.1 percent in December to 0.5 percent in January.
In his State of the Union address a week ago, Biden said that inflation was falling.
‘Massive Failure’
Republicans pointed to Tuesday’s inflation report—in particular, the monthly acceleration in prices—as proving Biden wrong.Sen. Tom Cotton (R-Ark.) also heaped criticism onto the president.
Market reaction to the news was also negative, with the Dow Jones plunging around 400 points after the data was released, though it had clawed back some of the losses at the time of reporting.
“There is nothing in this CPI report to deter Fed from staying the course of another quarter-point interest rate hike,” McBride told The Epoch Times, while other analysts similarly suggested that the inflation report did little to reduce pressure on the Fed to continue raising interest rates to try and relieve price pressures.
Richmond Fed President Thomas Barkin said in response to the data that the central bank may need to raise interest rates higher than previously expected if inflation continues to run too hot.
“Inflation is normalizing but it’s coming down slowly,” he said. “I just think there’s going to be a lot more inertia, a lot more persistence to inflation.”
Barkin said that the lingering impacts of COVID-19, unspent stimulus money, and supply chain kinks that have yet to be ironed out all contributed to elevated prices.
He added that the steady stream of high inflation data has prompted many businesses with pricing power to keep marking up products and “try to test where the levels of inelasticity really are.”
McBride said that the Fed has a ways to go before prices fall back to around the central bank’s 2 percent target.
“Inflation has shredded household budgets over the past 2 years, and not just when it comes to one-off discretionary expenses or special occasions, but for keeping up with day-to-day bills,” he said.
“Until inflation returns to the 2% neighborhood, pressure on household finances will continue.”