by Paige Terryberry
Senior Analyst for Fiscal Policy, John Locke Foundation
Inflation continues to ravage household budgets. According to the latest release from the Bureau of Labor Statistics, the Consumer Price Index rose 8.5% over the last year. This is less than June’s year-over-year rate due to decreasing energy indexes. The overall CPI was flat in July, owing to falling gas prices offsetting a continued rise in grocery and electricity prices.
Even so, the rate remains near the four-decade high. According to The Wall Street Journal, “Core CPI, which excludes often volatile energy and food prices, held steady in July, increasing 5.9% from the same month a year ago, a sign that broad price pressures remain in the economy.”
The energy index rose 32.9% over the past 12 months. After rising 7.5% in June alone, the rate decreased by 4.6% in July. Even with gas prices falling by 7.7% in July, the gasoline index is still 44% higher now than July 2021.
The overall food index increased 1.1% in July, the seventh consecutive monthly increase of 0.9% or more. Food overall is 10.9% higher than last year.
Grocery prices continue to accelerate. The food at home index rose 13.1% over the last year, the largest 12-month increase since the period ending in March 1979.
Meanwhile wages are not keeping up with inflation. Seasonally adjusted average hourly wages for all employees increased 0.5% over the month, but are down 3.0% over the year.
Inflation comes from massive government spending, fueled by newly-created money. The political elite chose to wield their power to print money and deficit spend over the past two and a half years in an effort to paper over the consequences of Covid lockdowns, leading to record inflation. And yet Washington shows no signs of showing fiscal restraint. Instead, Democrats in Congress wants to spend more of your money to subsidize unaffordable energy and weaponize the IRS against the middle class.
The so-called “Inflation Reduction Act” would do nothing to reduce inflation. In fact, the bill is more likely to increase both inflation and the budget deficit. Average household incomes would decrease by $1,200 according to a report released by the Committee to Unleash Prosperity.
Americans are struggling to pay rent, feed their family, and save for the future. Washington’s actions have sent a wrecking ball to the economy in the form of inflation. The latest spending bill would only exacerbate the harm on working families.
America needs leaders who will reject political siren calls and do what is right by the American people.