If you think inflation is already bad, you haven’t seen anything yet, Breitbart Economics Editor John Carney explained He said this in an interview Tuesday with Fox Business host Larry Kudlow.
Economic data for January released on Tuesday showed prices rising faster than expected. The Consumer Price Index (CPI) increased by 0.3% from the previous month. Core CPI rose 0.4%, the worst monthly reading since April last year.
“You’ll hear a lot of people saying, ‘Don’t make too much of a report,'” Carney said. “I’ve been pointing out in the last few reports that inflation is actually no longer falling and will probably rise again. And that’s what we’re seeing here. Fundamentals If you look at the inflation numbers, they are even worse than the headline numbers.”
As Carney explained on Tuesday’s show, Breitbart Business Digest:
As always, we focus on the Cleveland Fed median and trimmed average as leading indicators of inflation. The news here is pretty dire. The median CPI in January rose to 0.5% from 0.3% in December. This translates into an annualized rate of 6.5%, the highest in the past 11 months. The trimmed average also rose from 0.3% to 0.5%, also the highest level since February.
Last year’s decline convinced many investors that disinflation was here to stay and that it was clear that interest rates would be cut this year. The wind is currently blowing in the wrong direction, and the confidence placed in the disinflation theory has made the problem worse.
“We expect inflation to rise significantly,” Carney told Kudlow. “It was dragged down by some things that we can’t even rely on. So energy prices fell that month. But look, we have a big problem in the Middle East right now. You can’t rely on that continuing to happen. And there’s still some commodity disinflation going on. Perhaps it’s over. Commodity prices will start rising again.”
“What we expect going forward is an increase in inflation in the second half of the year,” he added. “The year-on-year figure was 3.1%, which is down from last month, but that’s only because last January it was 0.56%. So, we had a number that was significantly down year-on-year. The trend is up. ”
Legendary Reagan administration economist Art Laffer agreed with Carney’s assessment and pointed to the political implications for President Joe Biden.
“It’s going to get even worse for the Biden administration,” Laffer said. “This hasn’t been a good week for Biden. And frankly, as John said, these numbers look like they’re going to stay pretty much forever. We’re going to see more of an increase going forward.”
“Biden’s policies are clearly not working,” he concluded.
Kudlow stressed that rising prices are taking a “tremendous toll” on household budgets and incomes because people’s “income is worth less” in an inflationary economy.
“When you go to the store, you buy less stuff. This is a big political issue,” Kudlow said. “So Biden could try to work his way back and forth. But this is what’s bothering him. I call it the ‘affordability crisis.’ ”
“That’s a big problem,” Laffer agreed. “Not only is inflation not going down anymore, but if you look at the falling numbers from the index and the core CPI and the regular CPI, the core CPI has been higher than the regular CPI for 11 consecutive months in terms of inflation, which means prices are falling. That means we’re going to see things go up faster, not slower, for at least the next four, five, six months. ”
“This is a very serious real issue, but also a huge political issue,” he continued. “And I think, if you put it on top of everything else, this is just a death sentence for this administration.”
Rebecca Mansour is a senior editor at Breitbart News. Follow her on X @Ramsour.
