A recent report showed that inflation is again increasing, countering arguments from the Biden administration that the economy is improving. Washington’s announcement that the personal consumption expenditure price index (PCE) increased in December over November’s totals is a significant blow to President Joe Biden during his reelection effort.
The PCE increased 0.2% last month as compared to a price decrease of 0.1% in November. This was a significant increase and the highest hike since September 2023.
Furthermore, the increase in inflation was higher than anticipated. Markets had predicted a 0.1% increase instead. Furthermore, the overall ‘core’ rate of PCE inflation also increased by 0.2%. This is the cost of many common items minus that of fuel and food.
This inflation measure is especially important to federal policymaking. PCE inflation is the type that the Federal Reserve utilizes in its consideration of setting interest rates to quell price increases.
Overall, the rate of core year-over-year price increase is 2.9%. This is significantly higher than the overall annual PCE inflation rate of 2.6%.
The increase in inflation is likely to affect the decision of the Federal Reserve whether or not to cut rates. Markets are hoping for at least one reduction in interest rates this year as higher borrowing costs are a drag on the national economy.
However, the Fed may keep interest rates the same in order to try and further tamp down on inflation.
The recent inflation news also came after a recent poll indicated that a large majority of Americans are concerned about rising prices.
The great illusion of the self-congratulatory academics is how they ‘chain-weight’ inflation. The real number is over 40% in the last three years combined. These fools want the world to believe their make-believe numbers. https://t.co/1Z5ztww1fi pic.twitter.com/20IKjLizir
— 🇺🇸 Kyle Bass 🇹🇼 (@Jkylebass) January 26, 2024
A recent Axios poll showed that 59% of the public said that they were “angry, anxious or resigned” when shopping for groceries. When asked for more detail, the largest share of emotions expressed by Americans was anger.
Furthermore, 72% of consumers said that groceries are their personal highest exposure to inflation.
Groceries have increased significantly in price since Biden took office. A survey from the Bureau of Labor Statistics showed that $100 worth of groceries in 2019 now cost more than $125.