Inflation continues to climb in the United States. Consumer prices rose 6.8% in November in one year, a pace unheard of for 39 years. A real headache for Joe Biden who announced last month that its “top priority” was to reverse the trend, and which is struggling to get its social and environmental spending plan adopted. However, markets remained strong on Friday following the release of these figures, similar to what analysts had expected.
After + 6.2% in October, November indeed reached the largest increase on record since June 1982, according to the consumer price index (CPI) published on Friday by the Labor Department. And everything goes for the wallet of Americans: food products, gasoline, energy, electronic products or even plane tickets … The air fare index, for example, rose 4.7% after falling in recent months. In addition, excluding the volatile energy and food sectors, inflation also remained strong (+ 4.9%).
Persistent supply problems
“The figures this morning confirm what every American family already knows: inflation is out of control under the leadership of the Democrats,” reacted the powerful Republican leader in the Senate Mitch McConnell, in a statement.
For his part, Joe Biden preferred to highlight the current price trend rather than that of last month. “Developments in the weeks following the data collection for last month show that price and cost increases are slowing.”, he said in a statement while acknowledging that these did not slow down “not as fast as we would like”.
The president also did not fail to stress that the whole world is concerned by this inflationary surge linked to the pandemic. Strong consumer demand was further hampered by supply problems linked to Covid-19 and energy prices which increased the most over one year (+ 33.3%). Moreover, even before the release of the November inflation figures, the President had indicated that prices remained high in November. But he was quick to downplay its significance, stressing that it did not reflect “not today’s reality”, highlighting the drop in energy prices in recent weeks, after data was collected for the November report.
But anger is mounting among American consumers who saw the prices of new cars jump 11.1% last month, those of used cars by 31.4%. However, compared to last month, the monthly price increase slowed slightly: + 0.8% against + 0.9% in October. But it is higher than analysts’ projections (+ 0.6%), a sign that inflation is persistent.
La menace Omicron
In addition, the investigation was carried out before the emergence of the Omicron variant of Covid-19, which poses a new threat. Certain economists indeed anticipate an exacerbation of the logistical problems linked to new sources of contamination around the world, which could accentuate the inflationary surge.
After arguing that inflation was “temporary” and linked to the economic recovery from the historic recession of 2020, the Biden administration and the US central bank have come to admit that inflation is more sustainable than expected. Fears around an inflationary spiral have been mounting for several weeks within the US Federal Reserve. Fed boss Jerome Powell said on November 30 that the word “transient“was no longer the most precise term to describe the high level of inflation.
Joe Biden attacked
A boon for the Republican opposition who believes that Joe Biden’s economic policy consists of injecting trillions of dollars into the economy and contributes to the inflationary surge. Republicans also consider the plan “Build Back Better“(” Build back better “) could fuel inflation even more.
Joe Biden, who faces criticism on this point even in his Democratic camp, once again challenged this approach on Friday.
“The difficulty of rising prices shows that it is important for Congress to pass without delay my Build Back Better plan, which will reduce the cost of health care, prescription drugs and child care for families. , etc. “, he hammered.
His camp also argues that the some 1,800 billion dollars in spending will be spread over a decade and not all at once as was the case for the emergency plans adopted in the midst of the Covid-19 crisis. For its part, the Fed intends to accelerate the reduction of its monetary aid program to the economy to raise key rates in an effort to contain inflation. The institution is currently counting on a deceleration in inflation in the second half of 2022.
(With AFP)
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