The Consumer Price Index (CPI) rose 8.2% between September 2021 and September 2022, according to a Thursday report from the Bureau of Labor Statistics, surpassing expectations despite harsh contractionary policy from the Federal Reserve. The month-to-month increase of 0.4% exceeded analysts’ forecasts, while core inflation, which factors out the more volatile food and energy categories, reached 0.6% against an estimate of 0.4%.
Biden acknowledged the inflationary pressures while arguing that his legislative agenda has helped to alleviate related fallout.
“Today’s report shows some progress in the fight against higher prices, even as we have more work to do,” he said in a statement. “But even with this progress, prices are still too high. Fighting the global inflation that is affecting countries around the world and working families here at home is my top priority. Because of my economic plan, the United States is in a stronger position than any major economy to take on this challenge.”
Biden has repeatedly deflected on his administration’s role in rising price levels through the passage of multiple large spending packages. While the American Rescue Plan is anticipated to spend $1.9 trillion, other proposals approved over the past two years include the $370 billion Bipartisan Infrastructure Law, the $80 billion CHIPS and Science Act, and $55 billion in humanitarian and military aid for Ukraine, according to an analysis from the Committee for a Responsible Federal Budget.
Year-over-year inflation in September was essentially unchanged since the previous month’s reading of 8.3%. Lower energy costs produced a moderation from the 9.1% inflation rate in June and the 8.5% rate in July, although gasoline prices have since returned to an upward trajectory.
The statement pointed to the Inflation Reduction Act, which approved more than $360 billion in new climate spending but decreased budget deficits by an overall $240 billion as a result of new tax enforcement, as a measure that will cut prescription drug prices and lower energy expenses.
“Republicans in Congress’ number one priority is repealing the Inflation Reduction Act. That’s the exact wrong thing to do in this moment,” the statement concluded. “If Republicans take control of Congress, everyday costs will go up — not down.”
As the parting admonition implied, the September inflation report has immediate implications for Democratic prospects in the midterm elections. The economy and inflation are key issues among voters preparing to cast ballots, with 84% considering the former to be a top factor on their minds, according to a poll from ABC News and The Washington Post. The Republicans lead the Democrats by a 16% margin and a 19% margin with respect to trust in handling the economy and inflation, respectively.
Beyond the Biden administration’s fiscal policy, the elevated inflation could signal more aggressive monetary policy responses. The Federal Reserve raised the target federal funds rate by 0.75% last month, a move which followed two identical hikes in June and July, in an attempt to relieve elevated inflationary pressures. Many leading economists are criticizing the central bank amid officials’ excessive zeal to address rising price levels.