WASHINGTON—U.S. consumer prices in May steadily rose, surging to the highest annual inflation rate since August 2008. The core-price index rose to 3.8% in May, marking the largest increase since June 1992. Norbert Michel, director of The Heritage Foundation’s Center for Data Analysis, offers insight on the increase:
“For the second consecutive month, the official inflation report shows signs for concern. The 12-month increase for May was 5%, the highest annual increase since a 5.4% surge in August 2008. Given the resurgence in demand as the pandemic winds down, much of this increase reflects getting back to normal and is likely transitory. For instance, roughly one-third of the overall CPI increase is due to a coronavirus-related rise in used car and truck prices. However, irresponsible spending and fiscal policy from the Biden administration and radical leftists could make the problem worse. There is no doubt that families and producers across the country are feeling the effects of consumer price increases, but runaway inflation can be avoided if this administration and Congress abandon massive, unnecessary spending bills and restore prudent fiscal and monetary policies.”
Heritage Research Fellow Joel Griffith released the following statement on the way forward for Congress to prevent runaway inflation:
“In the coming months, it will be critical for Congress to get federal spending under control and to remove barriers that are keeping workers on the sidelines. It is equally important for the Federal Reserve to normalize monetary policy. The Fed is still operating on a financial-crisis era framework that blurs the lines between fiscal and monetary policy, making it easier to accommodate fiscal recklessness and harder to control future inflation.”
For more information on inflation and how Congress should avoid it, find Michel’s latest research here.