Prices rose by 5 percent in May compared with a year ago, the largest increase since the Great Recession, continuing a steady climb in inflation even as policymakers insist on staying the course.
Price spikes often coincide with downturns, and officials from the White House and Federal Reserve have predicted that prices will climb over the coming months, especially compared to a year ago, when the economy was reeling from coronavirus pandemic shutdown. However, the move adds new fuel to the Republican criticism that the Biden administration is spending too much, which could lead to an overheated economy.
The most recent inflation figures, released Thursday by the Bureau of Labor Statistics, are not rattling the Biden administration nor the Fed. Both predict that prices will continue to rise until supply chains and consumer demand recalibrate and the economy recovers. The Fed, which is charged with keeping prices stable and unemployment low, says it won’t rush to raise interest rates and tamp down on inflation until the labor market has time to heal.
As home prices soar in unlikely places, the most vulnerable residents pay the price
“As the virus is contained, the economy is improving, step-by-step,” tweeted Heather Boushey of the White House’s Council of Economic Advisers. “Today’s data on inflation is the latest indicator that things are both moving in the right direction and that we have supply-chain hiccups.”
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