WASHINGTON—According to the latest data released Wednesday, the inflation rate dipped slightly to 8.5% in July, compared to 9.1% in July 2021. The cost of everyday staples rose across the board. The price of eggs went up 38.0%, flour 22.7%, health insurance 20.6%, and airline travel 27.7%.
The drop in gas prices is largely responsible for the overall rate decrease, but this is attributable to decreased demand in July, as well as rising recession fears. Meanwhile, Senate Democrats passed the so-called “Inflation Reduction Act”, which would spend more than $700 billion on the left’s radical policy agenda, further drive up inflation, and haunt every American household.
EJ Antoni, research fellow in regional economics with The Heritage Foundation’s Center for Data Analysis, released the following statement Wednesday:
“Hardly a positive report, today’s CPI numbers show inflation is six times what it was when Biden took office. The Biden administration may think this is a political win, but it is a loss for American families.
“The Biden administration has lost all credibility on inflation. For the last year and a half, their disastrous economic policies have driven up costs and impoverished American families. Energy prices dropped slightly in July as consumer demand collapsed from record prices in June, but the cold reality is that whether the rate is 8.5% or 9.1%, Americans are feeling historic pain whenever they buy gas, groceries, or other staples—and we’re still moving in the wrong direction.
“In what may be the greatest example of deceptive marketing in American history, they are ramming the so-called Inflation Reduction Act through Congress, legislation that will only drive up inflation even more. The arsonists are filling the firehose with gasoline and promising to douse the flames they themselves lit.
“All the while, they have blamed everyone but themselves, from meatpackers to oil companies to Vladimir Putin. Somehow, it was Putin’s fault when prices rose, but Biden’s anti-energy policies are supposedly responsible for prices falling. In reality, gas prices, and thus last month’s overall, have gone down because of the Biden administration’s own failed economic policies that have sparked fears of recession and decreased demand. Similarly, when June’s inflation report showed a sharp increase in prices, the Biden administration called the numbers ‘out of date,’ a laughable new excuse. And yet, this excuse from just one month ago is nowhere to be found now that inflation has declined ever so slightly, while remaining at a 40-year high.”
Joel Griffith, research fellow in economic policy studies at Heritage, also released a statement:
“With so much attention fixed on soaring prices for gasoline and groceries, let's not overlook the housing crisis so acutely being felt by homeowners and renters. This is only beginning to become visible in the official inflation data.
“Since February 2020, home prices soared 43.5%. In just the past year, home prices are up nearly 20%, while residential property prices in the United States, adjusted for inflation, are now 6.7% above the prior all-time record levels of the 2006 bubble.
“Average apartment rental costs, meanwhile, have jumped more than 25% this past year. Because leases often roll over annually, the Consumer Price Index data from the Bureau of Labor Statistics does not yet fully reflect this surge. Since March 2020, Americans in numerous cities experienced rent increases well over 50%.
“Foolish fiscal policies driven by this administration and congressional Democrats have made housing increasingly unaffordable. The Federal Reserve printing presses that financed explosive government spending and the housing bubble continue to wreak havoc on Americans just trying to put a roof over their heads.”
BACKGROUND: Last month, inflation hit another 40-year high at 9.1% and GDP was negative for the second quarter, technically signaling a recession. Yet the Biden administration continues to deny the state of our economy. Biden and his administration tried to change the definition of what a recession is and what is happening in the American economy, but they can’t change the facts.
The home-price-to-median-income ratio now stands at more than 8.1, significantly higher than the levels of well under 5.0 experienced from 1980 to 2000. The mortgage-payment-to-income ratio is now tied for the highest level since the creation of the index in 2006. The mortgage payment on a median-priced home with a 20% down payment jumped from under $1,300 to more than $2,000 in just the past year as interest rates and home prices surged—a whopping 56% increase.
While the Federal Reserve stoked general inflation by printing dollars to fund government operations, the central bank fueled a rise in housing costs by purchasing $1.3 trillion of MBSs from Fannie Mae, Freddie Mac and Ginnie Mae. The $2.7 trillion the Federal Reserve now owns is nearly double the levels of March 2020. Artificially increasing the amount of capital available for the residential home mortgage market and distorting interest rates has exacerbated home unaffordability-- and it's a leading culprit behind the housing crisis pricing families out of shelter. Meanwhile. regulations continue to inhibit supply and drive-up costs-- sometimes by 30%.