Surging Inflation Calls for Responsible Budgeting
Today, the Bureau of Labor Statistics estimated the Consumer Price Index (CPI) grew by 1.0 percent in May and 8.6 percent over the past year. Core CPI inflation, which excludes the most volatile components of energy and food, grew 0.6 percent in May. We estimate 2022 inflation will total 10.1 percent if it continues to grow at its current pace, 6.0 percent if it grows at the Fed’s target for the rest of the year, and 4.7 percent even with no further inflation this year (see graph below).
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Today’s CPI data makes one thing abundantly clear: we are still under huge inflationary pressures. Of course, workers paying five dollars a gallon for gas and families paying 10 percent more at the grocery store already know this.
As the Federal Reserve continues to work to control inflation, it’s important that Congress and the President are helping to make the Fed’s job easier, not stand in its way.
As Secretary Yellen recently explained, “an appropriate budgetary stance is needed to complement monetary policy actions.” That means paying for new legislation, unwinding COVID relief, avoiding ill-advised measures that would worsen inflation such as student loan cancellation, and putting forward meaningful deficit reduction that lowers prices and tamps down demand.
In particular, smart health reforms can help to fight inflation, lower deficits, and improve the solvency of the Medicare trust fund.
Americans are rightly concerned about the soaring costs of everyday staples. As President Biden recently remarked, “reducing the deficit is one of the main ways we can ease inflationary pressures.” Let’s get it done.
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