The biggest disconnect today: US President Joe Biden touted the recently passed Inflation Reduction Act just after the country recorded a four-decade high for food inflation.
The president just signed the US$430-billion climate change bill after years of many forms and securing the backing of key Congress leaders after it’s been rebranded as a package to fight inflation.
“Today offers proof that the soul of America is vibrant. The future of America is bright and the promise of America is real,” Biden said at an event on the White House South Lawn.
This comes after US consumer price index continued to rise in August 2022, landing at a staggering 8.3% year-on-year. The figure blows past the US Federal Reserve’s expectations and provides a sure footing for a possible 0.75% rate hike angled for next week.
Food inflation recorded one of the highest spikes in the basket price: an 11.4% increase from a year ago–the highest since May 1979. Food at home recorded a 13.5% increase while food away from home notched a 8.0% increase.
Specifically, egg prices soared 39.8%, flour prices rose 23.3%, milk prices jumped 17%, and bread prices increased by 16.2%. Chicken prices increased 16.6%, meat prices jumped 6.7%, pork prices soared 6.8%, and fruits and vegetables jumped 9.4%.
While the Fed has been using interest rate hikes as a means to tame inflation, the central bank notes that food prices are generally out of this scope.
But Biden is determined that the recently signed law will help address the rising inflation, albeit it wouldn’t be immediately apparent.
“It will take more time and resolve to bring inflation down, which is why we passed the Inflation Reduction Act to lower the cost of healthcare, prescription drugs and energy,” Biden said in a statement earlier in the day.
Nevertheless, the food price hikes are currently hitting Americans. With the tightening of food exports in the global market, the soaring prices are believed yet to peak.
The Fed is expected to come out with its decision on interest rates next Wednesday.
Information for this briefing was found via CNN Business and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.