Biden says fight to lower US inflation will 'be a haul'

US President Joe Biden speaks during a press conference on the eve of his first year in office. PHOTO: AFP

WASHINGTON (AFP) - Lowering the record rate of US inflation will "be a haul," President Joe Biden said on Wednesday (Jan 19), but he insisted the price increases will subside if supply chain snarls and component shortages are resolved.

"The inflation has everything to do with the supply chain," the president said at a press conference.

"People see it at the gas pump, the grocery stores and elsewhere."

He said provisions in his Build Back Better spending proposal, which is stalled in Congress, would improve the situation, but "it's going to be hard and take a lot of work."

The US economy saw consumer prices spike to a multi-decade high of 7 per cent last year as a surge in demand from consumers and businesses ran up against shortages of labour and crucial supplies like semiconductors as well as global shipping delays.

Biden's approval rating has fallen as inflation has accelerated, prompting the White House to announce moves to address price fixing and concentration in industries, including slaughterhouses, to lower meat prices, increase semiconductor production and release oil reserves to reign in gas prices.

Biden also said the Federal Reserve has a "critical job in making sure that the elevated prices don't become entrenched."

After providing "extraordinary support" to the economy, "It's appropriate as... Fed Chairman (Jerome) Powell has indicated, to recalibrate the support that is now necessary," Biden said.

The Democratic president nominated Powell, a Republican, to serve a second term at the head of the independent central bank, which is poised to raise interest rates as soon as March and as many as four times this year to rein in price increases.

But Biden said "the best thing to tackle high prices is a more productive economy with greater capacity to deliver goods and services to the American people."

He has argued Build Back Better, which would channel more than a trillion dollars to improving American social services and fighting climate change, would also rein in inflation, but it lacks the votes of crucial Democratic lawmakers in the Senate.

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