White House expects inflation will ‘substantially’ increase in coming months

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The White House is expecting “substantially” higher inflation figures in the coming months, even after the February Consumer Price Index posted the highest year-over-year rate since 1982.

Yearly inflation rose to 7.9% in February, which the White House attributed largely to a 3.5% increase in energy prices.

INFLATION RISES TO 7.9%, HIGHEST IN FOUR DECADES

The White House Council of Economic Advisers noted that “there has been substantial run-up in energy prices since February resulting from the Russian invasion of Ukraine” and that “energy and commodities prices will likely contribute substantially to inflation in the coming months.”

The CEA added that half of current year-over-year inflation can be attributed to energy, “vehicle-related price increases, and pandemic-affected services.”

“Month-to-month CPI can be volatile. Looking at the average rate over the last three months (December, January, February), headline inflation has been about 0.7 percent, unchanged from 0.7 percent in the three months before (September, October, November),” the council added. “We know that the recovery from the pandemic will not be linear. The Council of Economic Advisers will continue to monitor the data as they come in.”

Oil and gas prices rose significantly in February due to Russia’s buildup of Russian forces along the Ukrainian border and speculation surrounding Russian President Vladimir Putin’s then-imminent invasion.

President Joe Biden said in a statement that the February report “tells the tale of two recoveries.”

“Our jobs recovery remains strong. New unemployment claims remain low, as jobs are created at a record level,” the president wrote. “At the same time, today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike.”

“As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: the costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing,” he continued. “I know that higher prices impact a family’s budget, which is why I am fighting to bring down the everyday prices that are squeezing Americans. Last week, in coordination with our allies, the U.S. secured a release of 60 million barrels of oil from our strategic reserves. My Administration is pushing for investments so we can manufacture more in America, strengthen our supply chains, and move goods to market at lower cost. I’m promoting competition to make sure big corporations are offering consumers fair prices, and I’m pressing Congress to pass my plan to lower the cost of essentials like prescription drugs and energy.”

The president had previously warned the nation on Tuesday, moments after announcing a ban on all Russian energy imports, that the cost of defending a democratic Ukraine would lead to increases in domestic energy prices.

He put the onus on U.S. oil and gas companies to boost domestic production and challenged them to choose between passing along higher returns to their investors and delivering savings to consumers.

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“Let me say this to the oil and gas companies and to the finance firms that back them: We understand that Putin’s war against the people of Ukraine is causing prices to rise,” Biden stated at the time. “But it’s no excuse to exercise excessive price increases or padding profits or any kind of effort to exploit this situation or American consumers.”

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