by Paige Terryberry
Senior Analyst for Fiscal Policy, John Locke Foundation
We are all watching for signs that allude to subsiding inflationary pressures, hoping that our trips to the grocery store and gas station become less expensive.
But the latest CPI data this month show the opposite:
The Bureau of Labor Statistics released new CPI data for the month of May this morning showing that inflation is still running hot, up 1% from the month prior, after rising 0.3% in April.
The annualized rate is now a whopping 8.6%, a new four-decade high.
The energy index increased 3.9% this month, after a 2.7% decrease in April. Energy rose 34.6% over the last year.
The food index increased 1.2% this month, following a 0.9% increase in April. Dairy products alone rose 2.9%, the highest monthly jump since April 2007. Groceries are up 11.9% over the year, the largest annual increase since 1979.
Meanwhile, real average earnings are down 0.6% over the month and 3% over the year. Worker wages are not keeping up with the rising cost of living.
The Federal Reserve lifted interest rates by half a percentage point last month. They will meet again next week to discuss further monetary tightening. Yet reaching a “soft landing” and avoiding a recession will be challenging given our economy is bloated with cheap money.
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, leading to record inflation. And yet they want more “free” programs that would callously add to inflationary pressures that harm the poor most.
Inflation is a tax nobody voted for. Poor and middle-class households in particular are pummeled by inflation.
Last month’s inflation numbers were grim, but better than this month. The Biden Administration called the data a “sign of progress.” The proposals put forth by this Administration are absurd. Who will be named the scapegoat for today’s data?
The political elite downplay inflation, yet Americans say this is our biggest problem.
I can’t help but be reminded of a scene from a favorite childhood movie of mine, The Emperor’s New Groove.
The townspeople come to the emperor’s palace for help, saying they are out of food:
Scroll to 0:40, or enjoy the clip in its entirety.
Yzma, the evil wanna-be emperor, responds: “It is no concern of mine whether your family has… what was it again?” “Um, food,” the townsperson responds.
America needs leaders who will acknowledge the root of inflation. But that would not score political points.