JThe producer price index hit a new high of 11.2%, and critics fear President Joe Biden’s fiscal program could make matters worse.

Producer prices rose 11.2% for the year ending March, according to a report released Wednesday by the Bureau of Labor Statistics, with the inflation rate up 1.4% from the month. previous. Inflation fears were raised when the White House backed the $1.9 trillion US bailout spending bill a year ago, with critics now demanding vindication.

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“This runaway inflation is a direct result of reckless spending by President Biden and congressional Democrats who devalued the dollar,” said Alfredo Ortiz, president of the conservative advocacy group Job Creators Network. “Russia is just a scapegoat. Small businesses must support candidates in November who promise to control spending and inflation.”

Some economists have warned that the spending bill will overheat the economy, which was already in a very stimulative environment thanks to near-zero interest rates and two previous pandemic-related stimulus measures under the previous administration.

Treasury Secretary Janet Yellen said last May that the Federal Reserve may have to raise interest rates to keep the economy from overheating. But the rate was only raised last month, and then by only 25 basis points, or a quarter of 1%.

The White House has pursued other policies that lead to higher consumption, such as extending the “pause” on student loans, which will lead some indebted people to spend their money on goods rather than repaying their loans. The administration continues to push programs from the failed Build Back Better bill, such as subsidized child care and universal pre-K, which also involve new high levels of public spending.

“We know that big, big costs – our child care, our health care, our elderly care – are all areas where the president has proposed a cost-cutting plan, and that certainly reminds the importance of moving forward with this,” the White House press secretary said. Jen PSAKI said on Tuesday.

Concerns about the inflationary impact contributed to the bill’s death at the hands of West Virginia Sen. Joe Manchin, a centrist Democrat, last December.

Nonetheless, liberals still argue that the measures can eventually reduce inflation by boosting output.

“The policies President Biden wants to implement would reduce the costs customers face for health care, child care, energy and transportation,” said David Madland, senior fellow at the Center for American Progress, in March. “These policies will directly reduce costs for customers. Moreover, in the long term, these kinds of expenditures that increase the productive capacity of the economy, especially if they pay off, should reduce inflation.”

Madland argued that even if the expenses are not paid for by further tax increases, the costs paid by consumers will still be lower thanks to government subsidies.

“The direct policy impact would more than offset any indirect and modest inflationary impact,” he added.

Biden has played on the positives of the economy, such as low unemployment and growth in gross domestic product, but that can be cold comfort for middle- and low-income consumers who have no other choice. than paying more for groceries and gas.

Average weekly spending on groceries now stands at $148 a week, a big jump from the pre-pandemic average of $113.50, according to data from the IMF, the Food Industry Association. Beef is up 16% year over year, while a gallon of milk has gone from an average price of $3.59 to $4.02. Gas prices have gone from $2.31 a gallon when Biden took office to $3.44 in November and around $4.11 on average today.

The Fed is now seen as likely to pursue a more aggressive 50 basis point interest rate hike in May. But such a decision carries its own risks.

“What started as a pandemic-related inflation spike and supply chain shortages has turned into a nightmare cost-of-living crisis with no way out, except for the Fed to spawn a sharp reduction in consumer demand, which is a polite way of saying economic slowdown or recession,” Fwdbonds chief economist Christopher Rupkey previously told the Washington Examiner.

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Biden hopes inflation will largely subside on its own before November while committing to modest measures such as allowing E15 fuel that can save consumers 10 cents per gallon and harnessing the strategic petroleum reserve. But the failure of the big-budget Build Back Better program could prove to be a blessing in disguise as inflation continues its upward spiral.

“The Federal Reserve and other outside economists continue to say that inflation will moderate by the end of the year,” Psaki said. “But we’re not going to wait for that. And that’s one of the reasons the president is going to keep taking action.”

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