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Inflation has reached a new four-decade high of 8.5% in March 2022 when compared to March 2021. It is the biggest increase since December 1981, and as expected, the White House has — once again — blamed Putin. President Joe Biden wrote a tweet referring to inflation as “Putin Price Hike.” However, Americans are not stupid and #Bideninflation went viral on social networks.
While it is true that Putin’s invasion has contributed to the rise in oil prices globally, it should be remembered that inflation in the United States had already reached 7.5% per year in January, before the invasion of Ukraine. In fact, since October 2021, when it jumped from 5.4% to 6.2%, inflation has been on a bad streak of 6 consecutive months of increase, reaching figures above 6%.
It should also be noted that although from February to March, energy prices rose 11.4%, in the last 12 months they have risen 32%. Oil prices as well as those of other raw materials have been rising for quite some time now. It is, therefore, wrong for the current administration to refer to inflation as “Putin Price Hike.” It is much more accurate to call this “Bideninflation.”
The administration’s diagnosis is worrisome but even more so is its proposed solution, releasing one million barrels of oil per day from the reserve will not end this problem. The government must accept that the two years of unbridled expansionary monetary policy and excessive federal spending—all promoted by the president to position himself as the one who has given the most aid—are the main causes of the inflationary problem. If we want to return to the Federal Reserve’s target of 2% on average, we must stop spending; the pandemic recession does no longer exist.
Inflation hurts mainly the middle and working classes, who see their salaries vanish in the face of falling real incomes. Workers are the ones who spend most of their salaries on those basic products whose prices are now skyrocketing. If some politicians are not moved by the hard time the people are going through because of inflation, they should at least remember that those workers are the ones voting in the upcoming elections and in which they will surely express their dissatisfaction with the economic situation. The Biden administration should recognize its faults and work on real solutions.
This article originally appeared in El American’s newsletter on April 13, 2022. Subscribe for free here!
Vanessa Vallejo. Co-editor-in-chief of El American. Economist. Podcaster. Political and economic analysis of America. Colombian exile in the United States // Vanessa Vallejo. Co-editora en jefe de El American. Economista. Podcaster. Análisis político y económico de América. Colombiana exiliada en EE. UU.