President Joe Biden said he’s ready to take on inflation, as government data confirms a pace of price increases not seen in decades.
The Bureau of Labor Statistics reported Wednesday morning that prices rose 6.2% year over year in October. A pace so fast has not been recorded in the CPI since December 1990.
Biden said in a report statment After CPI data is released. The president said his nearly $2 trillion plan to build back better will be key to supporting the US economy through recovery, downplaying concerns that it will exacerbate inflation.
The CPI data, which showed prices rising 0.9% month over month, appears to be underpinned by higher prices at the pump. Gasoline prices rose only 6.1% between September and October. Fuel oil prices rose 12.3%.
Biden said he directed the National Economic Council to “further reduce” costs in the sector. He also asked the FTC to “respond to any market manipulation or price gouging in this sector.”
No longer temporary?
But core components of the CPI show higher prices for other types of major expenses Americans face. The cost of food at home increased by 1.0% and the cost of shelter increased by 0.5%.
Policy makers at the Federal Reserve, the country’s central bank, have dismissed the rising inflationary prints as “temporary.” The idea: that COVID-related bottlenecks in the global supply chain (i.e. microchips) will lead to temporary price hikes that will eventually go away.
[Read: What is ‘transitory’ inflation — Yahoo U]
A lack of chips, for example, has driven up prices for used cars and trucks, making this category a common talking point for transitory inflation. But after months of price drops that seemed to show signs that price pressures were already easing, an October report showed price tags rising again, at 2.5%.
The Federal Reserve, which has been pumping money into the economy through the COVID-19 crisis, is warning that high inflation rates will likely continue into the new year. This month, the Fed will take the first steps to scale back its stimulus policies — by slowing the pace of its bond purchases.
But the central bank did not send any intention to raise interest rates immediately. The Fed has set near-term borrowing costs at nearly zero to support the recovery from the pandemic.
Inflation fears are growing at the same time as the Biden administration’s deliberations over whether to replace Fed Chairman Jerome Powell, who joined the Fed as one of Obama’s appointees, but was appointed to the position of president by Trump.
“I want to reaffirm my commitment to the independence of the Federal Reserve to monitor inflation and take the necessary steps to combat it,” Biden said in the statement.
Brian Cheung is a reporter covering the Federal Reserve, the economy and banking at Yahoo Finance. You can follow him on Twitter Tweet embed.
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