US inflation could last a while, Biden warns as pressures mount

BEVERLY HILLS • US President Joe Biden cautioned that inflation could last "for a while" after data on Friday showed that politically sensitive price pressures unexpectedly accelerated in recent weeks.

"We're gonna live with this inflation for a while," Mr Biden said at a Democratic fundraising event in Beverly Hills. "It's gonna come down gradually, but we're going to live with it for a while."

The wary comments at an event hosted by billionaire media magnate Haim Saban came as the administration faces increasing pressure ahead of the Nov 8 midterm elections, where Mr Biden's fellow Democrats' control of Congress is on the line.

Reacting to the latest inflation figure, Mr Biden blamed Russian President Vladimir "Putin's price hike" for most of the increases, saying in a statement: "We must do more - and quickly - to get prices down here in the United States."

The administration and many economists had initially thought that inflation pressures would be "transitory", easing as the recovery from the Covid-19 pandemic continued.

But price pressures have only expanded to additional goods and services worldwide as the Russian invasion of Ukraine took oil and food supplies off an already stretched global market.

Labour Department data shows US consumer inflation hitting a 40-year high of 8.6 per cent in the 12 months through May, with oil marking a record high and the cost of food soaring.

The surging costs have become a political headache for the Biden administration, which has tried several measures to lower prices but said much of the responsibility to control inflation falls to the Federal Reserve.

Mr Biden on Friday visited the Port of Los Angeles, where he has sought to clear a backlog of goods and accused the US oil industry of capitalising on a supply shortage to fatten profits.

The President has tried to hammer home his optimistic message about economic progress in the wake of the Covid-19 pandemic, including rapid growth in gross domestic product and record job creation, while pressing Congress to take action to lower costs on specific products.

But the new data dealt a crushing blow to his efforts, as the consumer price index (CPI) jumped 8.6 per cent against May 2021, up from 8.3 per cent in the 12 months ending in April and topping what most economists thought was the peak of 8.5 per cent in March.

Prices continued to rise last month for items including housing, groceries, airline fares and used and new vehicles, setting new records in multiple categories, according to the Labour Department report.

"The headline inflation numbers are dreadful. Strip away some special factors and they're merely bad," Harvard economist and former White House adviser Jason Furman said on Twitter.

Some economists expected the easing of pandemic restrictions to cause a shift in consumer demand towards services and away from goods, which they said would ease inflation pressures, but prices for services increased as well.

The CPI rose 1 per cent compared with April, after the modest 0.3 per cent gain in the prior month, the Labour Department reported, far higher than expected by analysts.

Energy costs soared 34.6 per cent over the past year, the fastest since September 2005, while food jumped 10.1 per cent - the first increase of more than 10 per cent since March 1981, the report said.

The price of US petrol averaged more than US$5 a gallon for the first time yesterday, extending a surge in fuel costs that is driving rising inflation.

REUTERS, AGENCE FRANCE-PRESSE