Biden Calls Shock Inflation Report ‘Out Of Date’ Due to Declining US Gasoline Prices

(Bloomberg) -- President Joe Biden sought to downplay a report showing higher-than-expected inflation in June, calling it “out of date” because of declining US gasoline prices.

Biden called inflation “unacceptably high”  in a statement but said that “today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices that have reduced the price at the pump by about 40 cents since mid-June.” 

“Those savings are providing important breathing room for American families,” Biden said in the statement, issued about one hour after the Labor Department’s report on consumer prices.

The consumer price index rose 9.1% from one year earlier, according to new Labor Department data, the largest increase consumers have seen since the end of 1981. The increase exceeded economists’ estimates for the fourth month in a row.

The average national retail price of gasoline surpassed $5 a gallon for the first time in June before retreating in the past few weeks. On a monthly basis, the spike in energy prices accounted for nearly half of all the overall gains in CPI. The gasoline index surged 11.2% from the prior month, while the annual increase of 60% was the largest since March 1980.

Read more: Gasoline Prices at Record Added Pain to Hot US June CPI Report

Accelerating inflation poses an enormous political challenge to Biden and his party as voters cement their choices ahead of midterm elections in November. Democrats stand to lose control of Congress over voter anger about unrelenting price increases, especially as Biden’s efforts to increase the supply of oil and curb shipping and other costs continue to yield few results.

One administration official said the report wasn’t surprising, given gasoline prices in June, but said it was disappointing that housing prices in particular continue to abnormally escalate.

Prices for rental housing, which accounts for roughly one-third of the inflation reading, have risen at an annual rate of 8.2% in the past three months. The trend is considered especially worrying because rents don’t reverse course as quickly as food or gas prices.

Biden’s statement on the monthly consumer price index report was issued as he begins a trip to the Middle East intended primarily to persuade Saudi Arabia and other OPEC+ nations to increase their oil production.

Average US gas prices in July are down 12% over the average price in June. But they are still up more than 47% from a year ago. Biden has blamed the war in Ukraine for much of the increase, noting a surge in gasoline prices after Russia invaded in February.

In addition to noting the backward-looking nature of the report, Biden pointed to signs that core inflation, which excludes food and energy, may be moderating.

“Importantly, today’s report shows that what economists call annual ‘core inflation’ came down for the third month in a row, and is the first month since last year where the annual ‘core’ inflation rate is below six percent,” he said.

But the June data showed that the core measure of CPI increased by 0.7% from May, the biggest monthly gain in a year. On a yearly basis, it did decelerate as Biden indicated, reflecting a surge in prices a year ago that dampens the annual measure.

(Updates with administration official reaction beginning in seventh paragraph)

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