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White House Braces for Another Scorching Inflation Report

·2 min read
REUTERS/Mario Anzuoni

With inflation still running hot, economists expect to see another big number in the June consumer price index report, to be released by the Labor Department Wednesday morning. Economists surveyed by Bloomberg estimate that inflation reached an 8.8% annual rate last month, higher than the 8.6% rate recorded in May and potentially the highest in more than 40 years.

Higher food and fuel prices are prime culprits in the continuing inflationary surge, as gasoline topped $5 a gallon last month in many parts of the country.

The White House on Tuesday tried to get ahead of the report, with National Economic Council Director Brian Deese and Council of Economic Advisers chair Cecilia Rouse issuing a memo that highlights the recent decline in gas prices. The inflation report “will largely not reflect the substantial declines in gas prices we’ve seen since the middle of June,” they wrote, noting that retail prices had fallen back below $5 a gallon and that wholesale prices indicate that further price declines are ahead.

Separately, an administration official told reporters that the June numbers do not reflect current conditions. “That elevated price in June is both out of date to where the market is today and out of date to what American consumers, more importantly, are actually experiencing today,” the official said.

Key measure cooling: In contrast to the main consumer price index (CPI), core CPI, which leaves out volatile food and fuel prices, is expected to drop from May’s 6% reading, with some estimates calling for a 5.7% rate in June. The Fed typically relies on core CPI to make policy decisions, but the likely decline is not expected to slow the Fed’s next round of interest rate hikes later this month.

For one thing, global markets are still quite volatile amid the ongoing war in Ukraine, and inflation could spike again, especially fuel prices. “We’re not completely out of the woods yet -- we could also see a sharp reversal in the decline,” Patrick De Haan of GasBuddy wrote earlier this week. “There remains the risk of a spike in prices that could send us to new record levels in August, should any disruptions occur.”

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