President Joe Biden is bragging about the lower inflation that has been going down since April of this year. That is a good thing BUT what was the cause of that inflation?
There is a lot of debate about the cause of current inflation. People have blamed things like the Russian invasion of Ukraine and corporate price gouging for current high rates of inflation.
Despite all the controversy, according to Fortune, economists generally agree on some of the causes behind the high inflation that has defined the economy over the last several months:
- The pandemic shifted consumer demand away from services toward goods, which left producers unable to keep up with demand.
- Factory closures from early in the pandemic reduced supply just as demand was rising, which sent prices up even further.
- Russia’s invasion of Ukraine caused a spike in oil prices, which increased the cost of both manufacturing and shipping, while also forcing up the price of wheat and other commodities.
The improving inflation numbers are great but it was not the result of anything the president did. It was the result of the increased interest rates thanks to the Federal Reserve.
June CPI Report Key Stats
- CPI rose 0.2% for the month versus 0.1% in May.
- Core CPI rose 0.2% after rising 0.4% in May.
- CPI rose 3.0% year over year after rising 4.0% in May.
- Core CPI rose 4.8% year over year after rising 5.3% in May.
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