Republican lawmakers have interpreted the jump in consumer and producer prices as a sign that inflation is spiking at levels that will hurt growth, saying that President Joe Biden’s $1.9 trillion coronavirus relief package overcooked the economy.
The White House points to charts that dig into two key market-based measures of inflation and see no cause for alarm in the medium to long term.
The charts suggest that inflation expectations — despite the recent bump in prices — are within the realm of expectations over the past 15 years.
The uncertainty has been magnified for voters as Republican lawmakers say that inflation will devastate the economy and Democrats counter that rising prices are temporary.
Biden aides are optimistic that the market figures, along with household sentiment surveys, indicate that inflation will drift down.
The Labor Department said last week that consumer prices rose at an annual pace of 5% in May, as prices for used vehicles, airfare and gasoline surged.
It’s unclear whether the financial markets’ relative calm reflects confidence that the Fed will raise interest rates should inflation stay elevated.
Senate Republican leader Mitch McConnell has put the blame squarely on Biden for rising prices, arguing that government intervention has caused prices and wages to increase to a degree that will ultimately imperil the economy.
“The latest data reinforce what too many Americans have been experiencing firsthand: The Biden administration’s partisan spending bill has blunted our nation’s economic recovery,” McConnell said last week on the Senate floor.