Consumer prices soared in 2021 in the United States, where inflation is at its highest for almost 40 years, according to figures published on Wednesday January 12 by the American administration. A major concern for Joe Biden who could pay the price for this surge in the November midterm elections.
The Americans had not known this for forty years. Inflation reached 7% in 2021, according to the consumer price index released Wednesday by the Labor Department. “The last time prices rose to such a high level was in 1982”, under Republican President Ronald Reagan, remind him Wall Street Journal.
“Even though prices exploded last year, they are still far from the historic highs reached in the early 80s”, remark CNN. “In the spring of 1980, inflation had peaked at 14.8%”.
Biden “could pay a political price” in November
This soaring cost of living nonetheless remains a major political problem for Democratic President Joe Biden, accused by the Republican opposition of having fueled inflation by adopting a stimulus policy to deal with the economic consequences of the pandemic. “The president and his advisers have predicted for months that inflation would only be transitory and that this temporary problem would fade as the economy rebounds and supply chain issues ease”, underlines the Washington Post. But the figures released Wednesday by the Department of Labor challenged these optimistic predictions.
Currently, “unemployment is low, wages are rising and the stock market is healthy”, recalls the Washington Post. “But with prices continuing to rise, Biden may be forced to pay a political price in the November ballot,” during which Republicans could regain control of both houses of Congress. Especially since the “Rise in prices concerns almost all consumer goods, from gasoline, to food, to used cars and building materials”.
The Fed “forced to act”
“This new jump in the consumer price index will inevitably have consequences” in the USA, notices for his part the Guardian. “The American central bank has certainly always tended to fear the risk of a deep recession more than galloping inflation because it remains marked by the legacy of the Great Depression. But the Fed cannot ignore today the risks of the price/wage spiral and will therefore be forced to act”.
The latter could be forced to raise its key rates earlier and stronger than expected, in an attempt to curb inflation. However, some experts fear that “Rising borrowing costs will stifle economic recovery”, note it Washington Post. Again, much to Joe Biden’s chagrin.
Noémie Taylor-Rosner
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