If you thought inflation was bad already, you ain’t seen nothing yet, Breitbart Economics Editor John Carney explained in a Tuesday interview with Fox Business host Larry Kudlow.
The January economic data released on Tuesday showed prices rising faster than expected. The consumer price index (CPI) rose 0.3 percent from the previous month; and core CPI rose 0.4 percent, the worst monthly figure since last April.
“You’ll hear a lot of people say, ‘Oh, don’t make such a big deal out of one report,’” Carney explained. “I’ve been pointing out for the last few reports that, in fact, inflation was no longer falling and was probably going to climb again. And that’s what we’re seeing here. If you look at the underlying inflation numbers, they’re even worse than the headline numbers.”
As Carney explained in Tuesday’s Breitbart Business Digest:
As always, we look to the Cleveland Fed’s median and trimmed-mean measures as leading indicators of inflation. The news here is pretty grim. Median CPI jumped to 0.5 percent in January from 0.3 percent in December. That annualizes to a rate of 6.5 percent, the highest in 11 months. Trimmed mean also jumped to 0.5 percent from 0.3 percent, also the highest since February.
The declines of last year convinced many investors that disinflation was here to stay and that it was clear sailing to rate cuts this year. The winds are now blowing in the wrong direction, and the troubles are made all the worse because of the confidence that had been placed in the disinflation narrative.
“We’re looking at a huge increase in inflation,” Carney told Kudlow. “It was pulled down by some things that we can’t even depend upon. So, energy prices fell for the month. But look, we have a big problem in the Middle East right now. We can’t depend on that to keep happening. We also still have some goods disinflation happening. That’s probably over. We’re going to start seeing the price of goods climb again.”
“What we’re looking down the path at is higher inflation later that year,” he added. “We had the year-over-year number of 3.1 percent that was down from a month ago, but that’s only because last January was 0.56. So, we had a huge number that dropped out of the year-over-year number. The trend is up.”
Legendary Reagan administration economist Art Laffer agreed with Carney’s assessment and noted the political implications for President Joe Biden.
“This is going to be even worse for the Biden administration,” Laffer said. “This has been not a good week for Biden. And frankly, these numbers do, as John said, look to be almost permanent. There are going to be more rises coming in the future.”
“The Biden policies are just plain not working,” he concluded.
Kudlow highlighted the “huge toll” rising prices have on family budgets and earnings because people’s “earnings are worth less” in an inflationary economy.
“You go to the store, and you buy less. This is a big political problem,” Kudlow said. “I mean, Biden can try to move his way back and forth. But this is what’s plagued him. I call it the affordability crisis.”
“It’s a huge problem,” Laffer agreed. “Not only is inflation not coming down any longer, if you look at the numbers that are dropping off the index and if you look at core versus regular CPI, core has exceeded regular CPI for 11 straight months on inflation, which means that prices are going to be rising at a faster rate, not a slower rate going forward, at least for the next four or five, six months.”
“It’s a real serious real problem as well as an enormous political problem,” he continued. “And if I can say, putting it on top of all the other stuff, it’s just a death knell for this administration I think.”
Rebecca Mansour is a Senior Editor-at-Large for Breitbart News. Follow her on X at @RAMansour.
