World

Inflation is soaring in the United States, at its highest for 40 years – RT en français

Inflation is soaring in the United States, at its highest for 40 years – RT en français

Consumer prices soared in 2021 in the United States, where inflation is at its highest for nearly 40 years. This is a major concern for Joe Biden, but also for the central bank, to which all eyes are now.

Inflation reached 7% in 2021, a record since June 1982, according to the consumer price index (CPI) released on December 12 by the Department of Labor. These 7% of inflation remain however far from the 14.8% which the country had known in 1980. Joe Biden, for whom this soaring cost of living is a major political problem, underlined the “progress” made by his administration, but acknowledged that “there was still work to be done, with prices still too high, which squeeze household budgets”.

The Republican opposition accuses the Democratic President of an inflationary policy with too much spending, and denounces what it calls “Bidenflation”. In December alone, however, the increase was smaller than in November (0.5% against 0.8%), in particular because the increase in energy prices slowed for the first time since April.

The principal economic adviser of the White House, Brian Deese, greeted on January 12 during a press point a “welcome deceleration”. “It’s still too high but it’s going in the right direction,” he added. He also announced new measures by the end of the month, to further reduce congestion problems in US ports, and ease the pressure on prices.

All eyes are now on the American central bank (Fed), which could raise its key rates earlier and higher than expected, in an attempt to curb this inflation which it considered, until recently, to be only temporary.

Thus, this December 13, Lael Brainard, future vice-president of the institution, estimated, during her hearing before the Senate banking committee, that inflation was too high. “Our monetary policy is focused on reducing inflation to 2% while maintaining a recovery that includes everyone. This is our most important task, ”she said.

Key rate hike in sight

The Fed is preparing to try a balancing act by raising its key rates to stem inflation, without slowing down the economy, which would jeopardize the recovery of the labor market. However, in December, although unemployment fell to 3.9%, job creations lagged behind and inequalities were very high. Fed Chairman Jerome Powell, who was heard earlier this week in the Senate, pledged to act “accordingly” if inflation persisted in the second half of the year, preparing people’s minds for a hike in key rates.

For Diane Swonk, economist for the audit firm Grant Thornton, quoted by AFP, the Fed has gone “from patience to panic in the face of inflation in record time”. Kathy Bostjancic, chief economist for UK-based economic foresight firm Oxford Economics, predicted that “persistent supply chain bottlenecks, in a context of high demand, will keep the rate going. inflation at a high level at least in the first quarter ”.

The high inflation rate observed recently in the United States should hamper the implementation of Joe Biden’s social and environmental investment plan, “Build Back Better”, which is already meeting strong opposition, because it is accused to be inflationary.

Malagigi Boutot

A final year student studying sports and local and world sports news and a good supporter of all sports and Olympic activities and events.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

3 × 4 =

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button