The June print of the Personal Consumption Expenditures Price Index — one of several measures of inflation faced by Americans and the Federal Reserve's "preferred gauge" — showed headline inflation up 3.0 percent since June 2022 after a 0.2 percent advance month-over-month.
The slightly better than expected print on PCE inflation is almost entirely attributable to an 18.9 percent decrease in energy costs over the last 12 months seen after gas prices in the United States hit their all-time highs last summer.
The PCE drop was all energy. That should reverse quickly. pic.twitter.com/UF6lV4ILVG
— Frog Capital (@FrogNews) July 28, 2023
Notably, President Biden has been tapping the Strategic Petroleum Reserve for millions of barrels of oil to try making up for the supply his administration regulated out of operation. That's not an infinite reserve, meaning there's likely to be an end-point to that artificial increase in supply that once gone will see energy prices rise again.
To wit, the June PCE price index's core number — which excludes food and energy prices — showed inflation rising 0.2 percent month-over-month for an annual advance of 4.1 percent compared to last June. That annual Core PCE number is more than double the Federal Reserve's stated goal of just two percent inflation, meaning Chairman Jerome Powell's work is not done. As seen this week following the Fed's latest meeting, another interest rate hike was announced to bring the total to its highest level in 22 years.
"Inflation continues to grow faster than the Federal Reserve's target rate, hurting ordinary Americans and small businesses struggling to keep up," noted Job Creators Network CEO Alfredo Ortiz. "Over the course of President Biden's term, inflation has meaningfully outpaced wage growth, reducing Americans' living standards," he also reminded of the negative real wages faced by Americans for more than 24 consecutive months since Biden took office.
"This Bidenflation is a result of Democrats' ongoing reckless spending that has bid up prices and diluted the currency already in existence," explained Ortiz. "This ongoing high inflation threatens even more Fed interest rate hikes, further reducing access to credit needed by small businesses."
Even though the monthly growth of inflation has been slowing after prices increased more than 15 percent on Biden's watch, the response from the Fed has created a second hit for Americans in the form of a "credit crunch," Ortiz noted. "Under the Biden economy, small businesses face one crisis followed by the next."