It has now been 300 days since President Joe Biden said that high inflation would be “temporary” as the cost of consumer goods including gas has continued to climb.
On July 19, 2021 Biden addressed inflation in remarks delivered at the White House and argued that the significant price rises that had taken place amid the reopening of the economy would not last.
“We also know that as our economy has come roaring back, we’ve seen some price increases,” the president said.
“Some folks have raised worries that this could be a sign of persistent inflation. But that’s not our view. Our experts believe and the data shows that most of the price increases we’ve seen are — were expected and expected to be temporary,” he said.
“The reality is, you can’t flip the global economic light back on and not expect this to happen,” Biden said and later added that “these disruptions are temporary.”
The annualized rate of inflation in June and July, 2021 was 5.4 percent as the economy emerged from tight restrictions imposed due to the COVID-19 pandemic.
June’s inflation was the highest rise in prices in 13 years and there was speculation at the time that inflation had peaked.
However, 300 days after Biden’s comments, prices are continuing to rise and the annualized rate of inflation is even higher than it was last summer. In April, inflation stood at a near-record high of 8.3 percent — levels not seen since in 40 years.
The average price of a gallon of gas also reached a new record high this week and cost more than $4.45 per gallon on Friday, according to the American Automobile Association (AAA).
The inflation rate in March was 8.5 percent and represented the largest one-year advance in prices since December, 1981.
In July last year, Biden said he had told Jerome Powell, chairman of the Federal Reserve, that the Fed was independent and “should take whatever steps it deems necessary to support a strong, durable economic recovery.”
On May 4, the Fed announced a half percentage point rise in interest rates and is expected to implement two further half-point rises in June and July. The central bank’s inflation target is an annualized rate of 2 percent.
Powell told Marketplace in an interview on Thursday that reaching that target could entail “pain.”
“The process of getting inflation down to 2 per cent will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels,” the Fed chairman said.
“What we can control is demand, we can’t really affect supply with our policies,” Powell said, explaining that supply was a major issue and that global events were also playing their part.
“So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control,” he said.
Newsweek has asked the White House for comment.
