The US Labor Department will release its monthly inflation report for June on Wednesday, which has already put the Biden administration on defensive mode.
Multiple government officials already started claiming the numbers will not reflect the actual health of the economy.
Biden Admin Releasing Excuses Ahead of Time
According to Dow Jones data, the Consumer Price Index (CPI) is likely to reach 8.8% for June, meaning Americans are paying 8.8% more for everything, compared to the same time last year.
By seeing these projections of the economic experts, White House officials have already started defending the government even before the release of the report.
Pretty important to remember that the CPI tomorrow is based on June.
Commodity prices were very high. Meaning CPI will probably be dog shit tomorrow causing fear.
They have come down ALOT. CPI for July could be quite good.
— Alex Becker 🍊🏆🥇 (@ZssBecker) July 12, 2022
Two top economic officials of the Biden administration, Cecilia Rouse and Brian Deese, asserted June data “will largely not reflect” the decrease in gas prices observed after mid-June.
Similarly, White House press secretary Karine Jean-Pierre noted that June CPI’s “headline number” will be “highly elevated,” due to the mammoth gas prices in June.
Jean-Pierre further added that Biden is tackling inflation as the first priority and prices will go down significantly in the upcoming months.
White House Press Secretary Karine Jean-Pierre says Wednesday’s CPI inflation data is expected to be “highly elevated, mainly because gas prices were so elevated in June … The cost of gas in July is already down 7% from the June peak.” pic.twitter.com/tbcQqztvnB
— The Recount (@therecount) July 11, 2022
While gas prices did reduce later in June, due to the fears of recession, the chronically high CPI number is likely to impact the monetary policy of the Federal Reserve as well.
Last month, when the CPI was 8.6%, the Fed increased the interest rate by three-quarters of a percentage point.
Now, with 8.8% projections of CPI, this policy rate can jump even further when the Fed meets this month to revise the interest rate.
Dems Can Have Good News Going Forward
Meanwhile, many experts believe that June’s CPI will be the peak of inflation as of now, and numbers will start to ease for the time being. If this happens, it will be cherished news for Democrats, who will have a new talking point for the November elections.
However, economists are tying the possibility of deflation with the global energy markets. If oil prices stop declining, these reduced prices will be a momentary relief only.
According to the head of US economics at Bank of America, there is a possibility that June will just be a “near-term peak” and not the “absolute peak.”
He further noted the prevailing uncertainty in the global oil markets, due to the European embargo on Russian petroleum products, could increase oil prices again. This means general inflation can once again rise near the midterm elections.
The upcoming CPI number will also impact many crucial business decisions in a variety of industries, ranging from petroleum to manufacturing.
If the number comes abnormally high and the Fed takes immediate action to increase the interest rate, it will skyrocket recession fears.
Once this happens, stock markets can crash multiple times in July, which will further reduce investors’ confidence in the economy.