Prices Continue to Rise, Putting Pressure on Biden’s White House

In January, producer prices surged 9.7%, a record high.

The 11-year-old PPI hit a new high of 9.8% in December, with prices jumping 1% in January alone, doubling forecasts. Concerns over inflation add to President Biden’s political worries ahead of the November elections.

“They can’t accomplish much in the short term,” said Bipartisan Policy Center senior vice president Bill Hoagland. “COVID still drives a lot of this. The sooner we can regulate the scarcity of workers and commodities coming in, the sooner we can control the prices.”

Hyperinflation and Moving Parts

Rising costs are a major issue for voters, especially those on fixed incomes. The PPI measures wholesale costs, which eventually trickle down to consumers.

According to Hoagland, the COVID-19 epidemic remains the major reason, with workers missing shifts owing to illness and others frightened to enter, especially during the omicron variant spike in January.

Rising tensions between Russia and Ukraine led to a rise in gas prices, making it more important for Ukraine to improve its border situation.

Hoagland opposes Biden using the strategic oil reserves or lowering the gas tax when Democrats are seeking to wean America off fossil fuels.

After months of denial, the Biden administration will need to get prices back to the Federal Reserve’s objective of 2% as quickly as practicable. The Fed uses the personal consumption expenditure price index, 5.8%.

The White House now admits it must confront the issue.

Republican lawmakers and conservative advocacy organizations want Biden to cut spending, have the Fed raise rates, and stop buying assets.

According to Job Creators Network President Alfredo Ortiz, higher borrowing prices impact consumers and small companies. Its budgetary consequences and economic distortions threaten to make high inflation hyperinflation.”

People who support Biden’s social spending plan say programs like subsidized child care would help people get back to work, which would boost productivity.

People who don’t support the project say the money from previous stimulus acts was used incorrectly, which caused prices to go up.

Controlling the Virus

The White House has also initiated inquiries into Big Meat, blaming industry consolidation for annual price increases of up to 20%.

However, business groups like the US Chamber of Commerce say labor and energy costs are to blame for declining jobs.

David Madland, a senior fellow at the Center for American Progress, says rising interest rates will cut down on inflation.

Rather, he agrees with Hoagland that controlling the virus will be key to future supply and demand balancing.

Prices lowered the president’s favorability rating. Republicans have criticized Democrat expenditures. On Tuesday, a White House official told the Washington Examiner employment and economic development are Biden’s top priorities.

“We respect the Fed’s autonomy in pursuing its twin goals of full employment and stable prices,” the official added. “The president will keep working on his three-step plan to fix problems, cut kitchen-table prices, and boost competition.”