The average cost of a gallon of gasoline in the US has risen to $5,014 as food costs experienced the highest one-year increase since 1979.
Gas prices are up $1.94 since that time last year and are up 50 cents in the last month alone, according to the AAA Gas Price Index.
The national average crossed the $5 mark for the first time in history over the weekend, and President Biden shifted the blame for soaring prices back to Russia.
Meanwhile, food prices have risen 11.9 percent since that time last year, the sharpest rise the country has seen since Jimmy Carter was in office.
Friday’s Labor Department report showed that the consumer price index rose 1 percent month-on-month in May, up 8.6 percent over the past 12 months, beating the recent peak in March.
Fresh numbers released on Friday suggested the Federal Reserve could continue its rapid rate hikes to combat so-called “biden inflation,” and markets reacted quickly, with the Dow shedding around 600 points.
Markets fell further during early trade on Monday as fears of a recession mounted.
New data shows annual inflation in the US rose to 8.6% last month. The report prompted Biden to concede that US inflation remains a concern
President Joe Biden speaks to reporters outside of Air Force One on Saturday. He continued to blame rising gas prices in the US on Russia and its war in Ukraine
Runaway inflation rates are hurting American wallets outside of the gas station, especially at the grocery store.
Grocery costs have risen at a breathtaking pace and are expected to continue to rise as the crisis lingers.
Egg prices are up 32% year-to-date and poultry prices are up 16.6% after an outbreak of bird flu in January killed about 6% of commercial chickens.
Embargoes against Russia have also led to price hikes in grain-based foods, while fats and oils are up 16.9% and milk are up 15.9%.
As inflation-related production costs rise, manufacturers and retailers alike have indicated they will be forced to raise prices further.
On Monday, Kraft Heinz said they would raise prices on a number of products in August, according to The Wall Street Journal, with sales chief Cory Onell saying recent inflation was directly responsible for the company’s upcoming price hikes.
And there’s no relief from eating out, as the Labor Department’s report shows restaurants increased prices by 7.4% over the year.
Skyrocketing food prices have caused consumers to switch brands and stores and change their buying habits.
The Beige Book report, compiled by 12 regional Federal Reserve banks, shows that people are choosing to buy half gallons of milk rather than full ones and are switching to private label to cut costs.
According to figures from the Food Industry Trade Group, 35% of consumers are now buying private label rather than branded, and 21% are choosing less fresh seafood and meat to save on costs.
Speaking to reporters on Saturday, Biden said Russia’s war in Ukraine was to blame for the rise in oil and gas prices.
“It’s outrageous what the war is doing in Ukraine,” Biden said.
“We are making every effort to ensure that we can significantly increase the amount of oil barrels being pumped from our reserves,” he added.
Biden faces a growing political backlash as high prices add to the pain for American families who see daily records at the pump.
Overall, global oil prices are rising, fueled by sanctions against Russia, a top oil producer, over its war in Ukraine.
Additionally, US refining capacity is limited as some refineries have been closed during the pandemic.
The combined result shows that the cost of refueling is skyrocketing, stealing money from Americans, who are facing the highest rate of inflation since 1981.
Polls show that Americans view high inflation as the nation’s biggest problem and most disapprove of Biden’s handling of the economy
Finally, following the release of the May Labor Department numbers, President Biden acknowledged that inflation remains stubbornly high after months of distracting the issue.
Biden previously claimed inflation had already peaked in December and has been trying to strike a hopeful note in recent months, but his reaction to the May number took a more somber tone while still left Vladimir Putin and Republicans in the Congress accused.
“Today’s report underscores why I have made tackling inflation my top economic priority,” Biden said in a statement, acknowledging that “it will not come down as much and as fast as we have to see.”
Polls show that Americans view high inflation as the nation’s biggest problem and most disapprove of Biden’s handling of the economy.
Friday’s report underscored fears that inflation is spreading beyond energy and goods, which are being pushed up by congested supply chains and the Russian invasion of Ukraine.
If the Fed becomes more aggressive in fighting inflation with rate hikes, it means more expensive credit for families and businesses and increases the risk of a recession.
“Virtually every sector has higher-than-normal inflation,” said Ethan Harris, head of global economic research at Bank of America.
“It has found its way into every nook and cranny of the economy. That makes it worrying because it means it’s likely to persist.
A leading British economist berated the Federal Reserve Bank on Sunday, suggesting the current inflation could have been avoided had central bankers not been naïve or arrogant in dismissing rising prices as temporary.
“Initially there was hope that it was temporary, meaning it was temporary and quickly reversible,” Mohamed El-Erain, a senior economic adviser to the alliance, told Face the Nation on Sunday. “There was hope, as you pointed out, that it had peaked. I never shared those hopes. I think you have to be very modest with what we know about this inflationary process. And I fear it gets worse, we could well get to 9% at that rate.’
He said that “humility is imperative.”
“I was very confused a year ago when so many people were so confident that inflation was temporary. There was so much we didn’t understand about post-COVID inflation that humility would have been a good idea,” he said.
YouTuber-turned-boxer Jake Paul has tweeted an attack on President Biden, blaming him for dumping prices, inflation, high rents and falling crypto prices
Meanwhile, controversial YouTuber-turned-boxer Jake Paul has joined the chorus of Biden critics and is taking to Twitter to voice his grievances about the state of the economy.
Paul released a direct message to Biden, listing reasons why the country is not doing well and where it is going.
“Biden Achievements 1. Highest Gas Prices 2. Worst Inflation 3. Plunging Crypto Prices 4. Highest Rental Prices Ever 5. Created a New Incomprehensible Language,” he began.
Biden’s full statement on May inflation rate
“Today’s report underscores why I have made fighting inflation my top economic priority. While it’s good to see critical “core” inflation easing, it’s not coming down as sharply and fast as we need to see. Putin’s price hike hit hard here and around the world in May: High gasoline prices at the pump, energy and food prices accounted for about half of the monthly price hikes, and gas pump prices have risen by $2 a gallon in many places since Russia troops began serving Ukraine to threaten. Even as we continue our work to defend freedom in Ukraine, we must do more—and fast—to bring prices down here in the United States.
“My administration will continue to do whatever it takes to lower prices for the American people. Congress must also act urgently. I urge Congress to pass legislation this month to reduce shipping costs and put it on my desk so we can lower the price of goods. And I urge Congress to pass legislation to reduce costs to families like utility bills and prescription drugs. The deficit has fallen more than at any time in history under my watch as President, but if Congress passed tax reform to get the wealthiest Americans and big corporations to pay their fair share, we could ease those inflationary pressures even further. These are the most important things Congress can do to help families now and complement the Federal Reserve’s efforts to bring down inflation.
“Prices at the pump are a big part of inflation and the war in Ukraine is a major cause. The United States is on track to produce record oil in the next year, and I’m working with industry to accelerate that production. But it is also important that the oil and gas and refining industries here do not use the challenge of the war in Ukraine as an opportunity to aggravate families with excessive profit-taking or price hikes. We all have work to do to bring down inflation. What won’t help is plans by some congressional Republicans to raise taxes on the middle class and working-class families. That would be a step in the wrong direction, which I resist resolutely.