Biden Says Inflation at ‘Peak’ And Should Soon Decline Rapidly

(Bloomberg) -- President Joe Biden said that despite experiencing the most rapid inflation in almost 40 years in November, U.S. price increases have peaked and will decelerate more rapidly than Americans expect. 

“It’s the peak of the crisis,” Biden told reporters at the White House on Friday. “I think you’ll see it change sooner than, quicker than, more rapidly than it will take -- than most people think.”

“Every other aspect of the economy is racing ahead,” he said, citing employment and growth in output. “Inflation is affecting people’s lives.”

His remarks followed a Labor Department report showing a 6.8% annual gain in the consumer price index in November, the most since 1982. It was the second straight month of CPI growth in excess of 6%, a phenomenon that’s become a drag both on Biden’s popularity with voters and his agenda in Congress.

Biden linked inflation to supply-chain troubles that have emerged in the U.S. recovery from the pandemic. 

“The reason for inflation is that we have a supply-chain problem that is really severe and it’s causing a significant increase in prices,” he said.

“At the bottom of it all is Covid,” he added. “Covid has had a serious impact on the ability to produce a whole lot of necessary products, particularly those imported from the Pacific and other places.”

The inflation gauge rose 0.8% from October, slightly exceeding forecasts, but the annual CPI figure -- the most rapid inflation the nation has experienced since 1982 -- was in-line with expectations.

“It does affect families,” Biden said. “You walk in the grocery store and you’re paying more for whatever you’re purchasing. It matters.”

In a statement earlier in the day, Biden said that “half of the price increases in this report are in cars and energy costs from November” and that since then, prices have begun to slide in both sectors.  

“Even with this progress, price increases continue to squeeze family budgets,” he said in the statement. “We are making progress on pandemic related challenges to our supply chain which make it more expensive to get goods on shelves, and I expect more progress on that in the weeks ahead.”

Republicans have seized on inflation data to hammer Biden for failing to protect U.S. households from a surge in the cost of living. The House Republicans’ Twitter feed referred to October figures, which were also the highest in several decades, as the “Biden boom.” Other GOP lawmakers warned that Biden’s $1.75 trillion 10-year fiscal proposal, known as Build Back Better, would push inflation even higher. 

The bill, which has been passed by the House and faces a close vote in the Senate, includes tax changes, social supports such as child-care benefits and measures to combat climate change.

Jared Bernstein, a member of the White House Council of Economic Advisers, said in an interview with Bloomberg Television that the president’s proposed legislation would have “no impact on near-term inflation.”

In the longer term the bill will lower costs for things like child care and prescription drugs, and increase the supply of labor, Bernstein said, which will help alleviate inflation.

But Republicans renewed efforts to kill the legislation on Friday citing both the inflation report and a Congressional Budget Office report they requested showing that programs in Build Back Better would cost trillions more to make permanent. Biden has said he won’t support extensions unless they’re offset with spending cuts, tax increases or other revenue increases.

Asked whether the inflation report endangered support for the bill by a key Democratic centrist, Senator Joe Manchin of West Virginia, Biden said he didn’t know but planned to speak with him next week.

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