Democrats Vote To Make Inflation Worse At The Worst Possible Time

Inflation In June Increased 9.1% Year-On-Year, Which ‘Catapulted U.S. Inflation To A New Four-Decade Peak’ And ‘Seemed To Counter The Narrative That Inflation May Be Peaking’

“Surging prices for gas, food and rent catapulted U.S. inflation to a new four-decade peak in June, further pressuring households and likely sealing the case for another large interest rate hike by the Federal Reserve, with higher borrowing costs to follow. Consumer prices soared 9.1% compared with a year earlier, the government said Wednesday, the biggest yearly increase since 1981, and up from an 8.6% jump in May. On a monthly basis, prices rose 1.3% from May to June, another substantial increase, after prices had jumped 1% from April to May.” (“US Inflation Reached A New 40-Year High In June Of 9.1%,” The Associated Press, 7/13/2022)

• “The June increase was heavily influenced by higher food and gas prices. Food prices increased 1% from May and 10.4% over the previous 12 months, while gasoline prices increased 11.2% from May and 60% over the past 12 months…. [T]he gains were broad-based, with everything from rent to motor vehicle costs increasing at the fastest rate in decades. The cost of dental services, the BLS noted, surged 1.9% month on month — its largest-ever increase.” (“U.S. Inflation Rises 9.1% In June, A Worse-Than-Expected Increase As Prices Continue To Climb,” NBC News, 7/13/2022)

• “[T]he breadth of the price gains shows how rising costs have seeped into nearly every corner of the economy. Grocery prices have jumped 12.2% compared with a year ago, the steepest such climb since 1979. Rents have risen 5.8%, the most since 1986. New car prices have increased 11.4% from a year earlier. And airline fares, one of the few items to post a price decline in June, are nevertheless up 34% from a year earlier.” (“US Inflation Reached A New 40-Year High In June Of 9.1%,” The Associated Press, 7/13/2022)

“US inflation accelerated in June by more than forecast, underscoring relentless price pressures that will keep the Federal Reserve on track for another big interest-rate hike later this month. The consumer price index rose 9.1% from a year earlier in a broad-based advance, the largest gain since the end of 1981, Labor Department data showed Wednesday. The widely followed inflation gauge increased 1.3% from a month earlier, the most since 2005, reflecting higher gasoline, shelter and food costs. …The so-called core CPI, which strips out the more volatile food and energy components, advanced 0.7% from the prior month and 5.9% from a year ago, above forecasts.” (“US Inflation Quickens to 9.1%, Amping Up Fed Pressure to Go Big,” Bloomberg, 7/13/2022)

“Excluding volatile food and energy prices, so-called core CPI increased 5.9%, compared to the 5.7% estimate. On a monthly basis, headline CPI rose 1.3% and core CPI was up 0.7%, compared to respective estimates of 1.1% and 0.5%. Taken together, the numbers seemed to counter the narrative that inflation may be peaking, as the gains were based across a variety of categories.” (“Inflation Rose 9.1% In June, Even More Than Expected, As Price Pressures Intensify,” CNBC, 7/13/2022)

• “Inflation is showing few signs of letting up, compounding the pressure on the Federal Reserve and White House to ratchet up their response …” (“June Inflation Soared 9.1 Percent Amid High Gas Prices,” The Washington Post, 7/13/2022)

June marked the FOURTEENTH consecutive month in which inflation rose at least 5 percent. (Bureau of Labor Statistics, Accessed 7/13/2022)

• June also marked the SEVENTH consecutive month in which inflation rose at least 7 percent. (Bureau of Labor Statistics, Accessed 7/13/2022)

Over The Past Year, Prices For Goods And Services Essential To Everyday Life Have Skyrocketed, With Grocery Prices Increasing The Most Since The 1970s

The price of all items increased 9.1% year-on-year. (Bureau of Labor Statistics, Accessed 7/13/2022)

Food prices increased 10.4% year-on-year, the largest increase since 1981. (Bureau of Labor Statistics, Accessed 7/13/2022)

Grocery (food at home) prices increased 12.2% year-on-year, the largest increase since 1979. (Bureau of Labor Statistics, Accessed 7/13/2022)

Prices for dining out (food away from home) increased 7.7% year-on-year, the largest increase since 1981. (Bureau of Labor Statistics, Accessed 7/13/2022)

Electricity prices increased 13.7% year-on-year, the largest increase since 2006. (Bureau of Labor Statistics, Accessed 7/13/2022)

Natural gas (Utility (piped) gas service) increased 38.4% year-on-year, the largest increase since 2005. (Bureau of Labor Statistics, Accessed 7/13/2022)

Gasoline prices have increased 59.9% year-on-year, the largest since 1980. (Bureau of Labor Statistics, Accessed 7/13/2022)

Prices for housing increased 7.3% year-on-year, the largest increase since 1982. (Bureau of Labor Statistics, Accessed 7/13/2022)

Rental prices for a primary residence increased 5.8% year-on-year, the largest increase since 1986. (Bureau of Labor Statistics, Accessed 7/13/2022)

Prices for services overall increased 6.2% year-on-year, the largest increase 1991. (Bureau of Labor Statistics, Accessed 7/13/2022)

The Penn Wharton Budget Model And Tax Foundation Estimated Democrats’ Reckless Taxing And Spending Bill Would Increase Inflation While Inflation Is Currently High And ‘Likely Won’t Reduce Inflation At All’

PENN WHARTON BUDGET MODEL: “We estimate that the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024. We estimate a 0.25 percentage point fall in the PCE price index by the late 2020s. These point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation.” (“Inflation Reduction Act: Preliminary Estimates Of Budgetary And Macroeconomic Effects,” Penn Wharton Budget Model, 7/29/2022)

• “The Inflation Reduction Act of 2022, the breakthrough US legislative deal on key parts of President Joe Biden’s agenda, likely won’t reduce inflation at all, according to a study. And that’s coming from researchers influential with the senator whose vote was crucial to sealing the deal, Joe Manchin of West Virginia. The study, from the Penn Wharton Budget Model, estimates the act would cause inflation to ‘very slightly’ rise until 2024 then slide after that. Overall, the researchers said in the report Friday, there’s ‘low confidence that the legislation will have any impact on inflation.’” (“‘Inflation Reduction Act’ Has Little Inflation Help, UPenn Study Says,” Bloomberg, 7/29/2022)

TAX FOUNDATION: “By reducing long-run economic growth, the bill worsens inflation by constraining the productive capacity of the economy. … By increasing spending, the bill worsens inflation, especially in the first two years, as revenue raisers take time to ramp up and the deficit increases. We find that budget deficits would increase from 2023 to 2025, potentially worsening inflation. To the extent the tax credits and health-care subsidies are expected to be extended on a permanent basis, these policies put upward pressure on inflation. Lastly, to the extent the durability of the bill’s provisions are in doubt—that is, due to the lack of bipartisan support—it may have little impact on expectations about the fiscal outlook and therefore inflation. On balance, the long-run impact on inflation is particularly uncertain but likely close to zero.” (“Details & Analysis of the Senate Inflation Reduction Act Tax Provisions,” Tax Foundation, 8/02/2022)