Biden’s Inflation Narrative Dies as Price Growth Rises to a 7-Month High

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News Analysis

According to the Bureau of Labor Statistics’ (BLS) latest price inflation data, CPI inflation in March rose to a seven-month high, and price inflation hasn’t proven nearly as transitory as the regime’s economists have long predicted.

According to the BLS, Consumer Price Index (CPI) inflation rose 3.5 percent year over year during March, without seasonal adjustment. That’s the thirty-seventh month in a row of inflation well above the Fed’s arbitrary 2 percent inflation target.

Month-over-month inflation was flat with the CPI rising by 0.4 percent from February to March, with seasonal adjustment. Month-to-month growth had also been 0.4 percent from January to February.

The ongoing price increases largely reflect growth in prices for food, services, electricity, and shelter.

For example, prices for “food away from home” were up 4.2 percent in March over the previous year. Gasoline prices rose 1.3 percent over the period, but electricity surged to 5.0 percent. Prices for “services less energy services” rose 5.4 percent, year over year, while shelter rose 5.7 percent over the period.

Some specific categories were well above even this in year-over-year price inflation. For example:

1. Car insurance prices: up 22.2 percent

2. Car repair prices: up 11.6 percent

3. Transportation prices: up 10.7 percent

4. Hospital services prices: up 7.5 percent

5. Homeowners’ prices (“Owners’ equivalent rent”): up 5.9 percent

Removing volatile energy and food prices from the index, we find price inflation nonetheless remains stubbornly high. So-called core CPI growth remains almost double the “two-percent target”—at 3.8 percent—keeping price inflation growth near thirty-year highs. In other words, core CPI is a long way from returning to “normal.” Moreover, March’s month-over-month increase remains at 0.4 percent, which is the largest increase recorded in any month since April 2023.

Biden Blames Corporate Greed

In recent months, supporters of the current regime have repeatedly claimed that inflation is “falling” or otherwise rapidly disappearing. Paul Krugman has been one of the most vocal cheerleaders claiming the problem of price inflation is “solved.” This morning, before the release of the new report, South Carolina Congressman Jim Clyburn insisted that price inflation in going down, and that people only believe prices are rising because of online “disinformation.”

This narrative, however, is quickly becoming implausible. Even the legacy-media headlines in response to the new CPI report are generally along the lines of how stubbornly high price inflation is “a political blow to Biden.” Not surprisingly, President Biden attempted to defend his “handling of inflation” by outright lying about the timeframe of when price inflation began its most recent surge upward. The President today claimed to have “dramatically” reduced price inflation, claiming that “we’re better situated than we were when we took office, where inflation was skyrocketing.” Yet, when Mr. Biden took office, the CPI inflation rate was 1.7 percent.

Moreover, for most of the first year of his presidency, Mr. Biden claimed there was no price inflation of any significance and joined Federal Reserve chairman Jerome Powell in claiming that price inflation was “transitory” and nothing to worry about. It was not until the summer of 2022 that the administration and the central bank admitted that surging price inflation required a response of some kind. Even then, the target policy interest rate was not allowed to rise above three percent until September 2022.

In other words, the response of this administration and its allies in the central bank actively continued to embrace inflationary easy-money policies well into the Biden years.

Even as surging prices have forced the Fed and the administration to give the appearance that they are taking decisive action against price inflation, neither has shown any interest in rejecting the policies that have caused today’s rapidly rising cost of living. This is evident in the fact that reversing the 40-year highs in price inflation we’ve seen over the past four years is not even on the table. That would require an embrace of true and sustained quantitative tightening (i.e., monetary deflation) which would allow consumers and taxpayers to reclaim some of the purchasing power that has rapidly evaporated over the past four years.

As it is, the best the administration can (truthfully) claim is that the recent mild retrenchment from covid-era inflation policies has allowed the rate of price inflation to somewhat slow from the eight- and nine-percent increases we witnessed in 2022. That is small comfort for ordinary people who have seen prices surge by 20 percent or more in recent years. While some wage earners have managed to keep up with this, people at the lower ends of the income scale—such as pensioners and first-time homebuyers—have faced disastrous price increases.

While the administration has been forced to admit that price inflation is not going away, the president has nonetheless continued to try to blame the private sector for rising prices. For months now, the administration has attempted to blame “greedflation” or “Putin’s inflation” or shipping delays for price inflation.

None of these things cause price inflation, of course. The cause of price inflation is monetary inflation fueled by the central bank.

Moreover, this is made worse by the deficit spending of both the Administration and the GOP in Congress. When deficits surge upward as they are doing now, the central bank is under pressure to force down interest rates on new federal debt. As deficit spending has reached historic highs in recent years, this has required the Treasury to dump ever larger amounts of federal bonds into the marketplace. The Fed then must essentially print money so the Fed can buy up more bonds. Without the Fed mopping up more government debt in this fashion, interest rates would surge upward, forcing up interest rates in general and driving up federal debt costs.

In spite of all of this, the regime remains unrepentant, and there is little danger that it will admit its role in fueling the price inflation that is now crippling many ordinary Americans. Rather, we can expect the administration and the regime in general to continue gaslighting the public and claiming that greedy capitalists cause inflation.

From Mises.org

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.