Recent figures show that the inflation rate accelerated to its highest point in seven months, putting potential pressure on the Federal Reserve to continue raising interest rates. The increase also comes as an unwelcome surprise to President Joe Biden as he begins his 2024 reelection.
The personal consumption expenditure price index was significantly higher in its August ratings than it had been a month prior. Overall, the index increased 0.4% in August, compared to 0.2% in July. While the increase was about what was expected, the news was certainly unwelcome. The price index, which is tied to the average consumption of Americans, saw increases in energy costs, which drove it up.
Core prices, not including food or energy, increased by a lower 0.1%. Overall, core prices have risen almost 4% in the last year.
The recent figures also come as other inflation metrics have been higher than expected, due to a number of factors. The price of gasoline has increased significantly in recent months, placing additional pressure on Americans’ wallets.
Your reckless spending poured gasoline on the inflation fire, turbocharging the rising costs that are hurting the American people.
When I'm the nominee, I'll make you climb out of your basement, accept responsibility, and defend your failed record, @JoeBiden.
And when I'm… https://t.co/O1L33xArAa
— Ron DeSantis (@RonDeSantis) September 28, 2023
Stocks fell Friday after the release of the news. The bad news also comes as the market has reached recent lows, in part over the concern about inflation.
As of Friday afternoon, the major indices fell about half a percent after they had grown considerably earlier in the session. Losers included Walmart and Travelers Companies.
The increase in inflation puts the Fed in a precarious situation. Should it increase rates again, which its leaders indicated is possible, the U.S. economy runs the risk of recession. However, should the rates not be increased, the risk of inflation would remain in place, or perhaps accelerate.
The Fed has steadily increased interest rates over the past two years in an attempt to tamp down on inflation.
The increased inflation rate also contradicts recent statements from Biden administration officials that price increases were decelerating. Instead, the rise of average prices may add to pressure on the White House to adjust its energy policy, which Republicans blame as contributing to inflation.