White House Braces for Another Scorching Inflation Report

White House Braces for Another Scorching Inflation Report

Gas prices have been falling lately, but Wednesday's inflation report is expected to show another 40-year high.
By Yuval Rosenberg and Michael Rainey
Tuesday, July 12, 2022

Good Tuesday evening. The House select committee investigating the January 6 insurrection held another public hearing today and sought to connect former President Donald Trump to the extremist groups that attacked the Capitol.

“The strategy is to blame people his advisers called ‘the crazies’ for what Donald Trump did,” Rep. Liz Cheney (R-WY) said. “This, of course, is nonsense. President Trump is a 76-year-old man. He is not an impressionable child. Just like everyone else in our country, he is responsible for his own actions and his own choices.”

Cheney closed out the hearing by saying that Trump tried to call a witness in the committee’s investigation, adding that information about that outreach was passed on to the Justice Department and warning against witness tampering.

Here’s what else is going on.

White House Braces for Another Scorching Inflation Report

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 “That elevated price in June is both out of date to where the market is today and out of date to what American consumers, more importantly, are actually experiencing today,” the official said.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 with 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.”

Quote of the Day: Manchin Reiterates His Priorities

“I’ve told you all how many times? Inflation, inflation, inflation. Gas prices, gas prices, gas prices. Food prices, food prices, food prices. And energy. If you’re gonna have gas prices lower, produce energy. Period.”

– Sen. Joe Manchin (D-WV), as quoted by John Bresnahan of Punchbowl News on the budget reconciliation bill Democrats hope to finalize in the coming weeks.

What do Manchin’s comments mean for the package of climate and energy programs he’s negotiating with Senate Majority Leader Chuck Schumer? Your guess is as good as ours, but as we mentioned yesterday, Democrats reportedly hope to finalize those climate provisions this week.

Numbers of the Day

$1.7 Billion: Ukraine will get another $1.7 billion in aid from the United States and the World Bank to pay health care workers’ salaries and provide other essential services, the U.S. Agency for International Development (USAID) said Tuesday. “The additional resources provided by the United States, through the World Bank, will alleviate the acute budget deficit caused by Putin’s brutal war of aggression and ensure the Ukrainian government can continue operating and responding to critical needs,” the agency said. USAID has so far provided $4 billion in direct budgetary support to the Ukrainian government.

About 10%: Roll Call’s Jessie Hellmann reports that health insurers in the individual market have begun proposing some pretty hefty rate increases for 2023. Health insurers have filed rate proposals for next year in about a dozen states so far, with an average increase of about 10%, according to acasignups.net.

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