More than a year ago, the White House, President Biden, and his administration assured Americans that inflation was just “transitory.” However, Friday’s release of April’s Personal Consumption Expenditures (PCE) price index has once again debunked the President’s first of many attempts to deflect blame for rising prices. The PCE price index, which is considered the “preferred gauge” for the Federal Reserve, surged in April, exceeding some economists’ predictions of a 3.9 percent yearly rise to register a 4.4 percent increase over the year. The core PCE, which removes more volatile expenses like energy and food, also surpassed expectations with a 4.7 percent increase but by a smaller margin.
BREAKING: PCE inflation, the Fed's "preferred inflation gauge," RISES to 4.4%, above expectations of 3.9%.
Core PCE inflation RISES to 4.7%, above expectations of 4.6%.
This is a major setback to the Fed's fight against inflation.
First increase in PCE inflation since October.
— The Kobeissi Letter (@KobeissiLetter) May 26, 2023
The headline PCE number for April’s data is another indication that inflation is still on the rise, with the same swift movements seen in other recent inflation metrics such as the Consumer Price Index. What’s more, inflation is not just remaining elevated; it is increasing momentum in the wrong direction.
“This President’s never-ending wave of devastating inflation reports keeps coming,” said Rep. Jodey Arrington (R-TX), chairman of the House Budget Committee. He added that although Americans do not need a report to tell them they are paying higher prices each month than the last, they have felt the pain of Biden’s reckless economic policies for the past 25 months. Arrington pointed out that this is not a thriving economy, and it’s high time for Biden to collaborate with Republicans in the House on strategies for controlling spending, saving taxpayers’ money, and restoring economic growth.
The PCE price index shows that shelter’s cost, which has been one of the main contributing factors to ongoing inflation surges in recent months, is something of a runaway inflation train. According to Alfredo Ortiz, President and CEO of the Job Creators Network, this problem was forecasted, and inflation is continuing to increase. The PCE and Core PCE rates both increased compared to last month’s metrics and are still 2.5 times higher than the Federal Reserve’s objective level. Ortiz noted that this troubling sign demonstrates that Bidenflation is not going away anytime soon, and the latest inflation data emphasizes the significance of Republican initiatives to restrain reckless spending during the ongoing debt ceiling fight. Reining in spending is critical in addressing this unprecedented and consistently high inflation, which is causing significant pain to small enterprises and ordinary Americans.
Some Fed watchers had anticipated that Chairman Jerome Powell and the Federal Open Market Committee (FOMC) might announce a “pause” on the interest rate hikes that have been in place for more than a year at every Fed meeting. Unfortunately, with the Fed’s “preferred” metric indicating that inflation is outpacing projections, those who hoped for a break from ever-increasing interest rates may have just been let down. Friday’s PCE price index print has made another interest rate increase almost inevitable in June and hints at an additional hike in July.