prices rose 5% in May compared to the same month of the previous year, in an increase in inflation that threatens to overheat the US economy. and that divides the Government of Joe Biden and the Republicans on its seriousness.
Prices were expected to rise after the recession caused by the Covid-19 pandemic, which sank the job market and economy of the world’s leading power almost overnight. But the increase is very marked: the highest inflationary surge in the last thirteen years and with a particularly aggressive figure: prices in the last three months rose 9.7% compared to the same period last year.
The ingredients that have contributed to the rampant price rise are advances in vaccination so far this year, the fall of restrictions due to the pandemic that affected many sectors, the rain of money from the last rescue plan promoted by Biden in March -1.9 trillion dollars- and the savings of Americans during the pandemic and that are now more willing to spend.
The sectors that saw the highest price increases are those that were also severely affected during the pandemic. For example, the used car sector, car rental services, hotel reservations or air travel. There have also been strong rises in the price of food and in restaurants. The data, published this Thursday by the Office of Labor Statistics, adds more pressure on the White House and the Fed to take measures to avoid uncontrollable inflation. For the moment, the position of both is that it is a temporary situation, normal after last year’s recession and that there will still be more price increases as production chains and consumer demand are coupled.
For the White House, in fact, the inflation data is “the latest indicator that things are moving in the right direction,” Heather Boushey, who sits on Biden’s Council of Economic Advisers, said on Twitter.
Nor has the Fed given any indications at the moment that it intends to tighten rates in an accelerated way to contain inflation or abandon the massive monthly purchases of assets to reactivate the economy, as it has done since last year, with an eye toward improving the market. of employment.
Its former president and now Treasury secretary, Janet Yellen, said last weekend that this year inflation could rise in the US to 3% levels, above the average of 2% that the Fed defends to avoid the overheating of the world’s leading economy. It will be necessary to see in the coming months if the regulator prints changes based on the advance shown by prices this summer, in which an economic explosion is expected.
For Republicans, the Fed is slow. This was stated by Senator Patrick Toomey, who reacted on the same social network to the data assuring that “it is time for the Fed to begin the process of normalizing its monetary policy.” The most common criticism among Republicans is to accuse Biden of having money showered the country’s economy with the latest bailout package, which is behind the inflationary pressure. And they also link it to Biden’s current plans: extensive programs of spending on infrastructure and welfare, paid for with increases in taxes on companies and large fortunes.