The sudden increase in price growth throughout the economy poses a temporary challenge for President Biden, who was relying on decreasing inflation to boost his chances of re-election.
President Biden and his team have been pleased with the decline in annual inflation rates over the past year, following a period of rapid price growth that negatively impacted his approval ratings early in his presidency.
They have been eager for inflation to continue decreasing in order to provide relief to consumers and potentially prompt the Federal Reserve to lower interest rates. This would help lower borrowing costs for mortgages, car loans, and other forms of consumer credit. President Biden has specifically focused on supporting home buyers, especially young voters who are struggling to afford high housing prices with mortgage rates remaining around 7 percent.
Financial analysts on Wall Street view the unexpected rise in the inflation rate as a signal that the Federal Reserve may keep interest rates steady for longer than anticipated. This could mean no rate cuts before the November election, during which President Biden’s opponent, former President Donald J. Trump, has criticized him for both high inflation and borrowing costs.
This news coincides with recent polls showing a gradual improvement in Americans’ perceptions of the economy. Democratic pollsters have highlighted recent surveys as a guide for how President Biden should address inflation in the coming months: They indicate that American voters attribute price increases more to corporate greed than government spending. President Biden has embraced this message, even calling out companies in his State of the Union speech for maintaining high prices.
He reiterated a similar sentiment in a statement on Wednesday, emphasizing consumer frustration with inflation.
“Prices for housing and groceries are still too high, despite some items like milk and eggs being cheaper than a year ago,” President Biden stated. “I have a plan to reduce housing costs by constructing and renovating over two million homes, and I urge corporations, including grocery retailers, to use their substantial profits to lower prices.”
