On Tuesday’s broadcast of CNBC’s “Money Movers,” White House National Economic Council Director Lael Brainard reacted to the January CPI inflation report by stating that there are probably “some anomalies in today’s report” and that overall data on the economy is good. She also argued that grocery corporations are gouging.
Brainard said, “You know what, I always look at the data picture. I don’t overly weight one data point. And the overall picture looks good. Growth above 3, unemployment below 4, and inflation down by two-thirds, now, of course, we want to keep working to lower costs for the American people, but inflation has come down a lot while employment and growth have remained strong. One data point I just noticed today, or one milestone I noticed today is that, actually, real wages are up by 3.4% over the cycle. That means that Americans have more money to spend at the end of the month. That is the best real wage performance of any recovery in 50 years.”
Co-host Sara Eisen then asked, “It’s good. But if our prices of food and shelter and insurance, basic costs of living, are stubbornly high and continue to rise, isn’t that problematic?”
Brainard responded, “The inflation has actually come down by two-thirds. If you look at the price of a gallon of milk, a gallon of gas, a dozen eggs, those are all down over the last year. And I expect there are some anomalies in today’s report that, as we read through to the preferred gauge of inflation for the Federal Reserve, that we’re going to continue to see what we’ve been seeing, which is that PCE inflation is going to continue coming in around…2% on a six-month basis, both core and headline.”
Brainard added, “I think if you look at the preferred measure for the Federal Reserve, which is PCE inflation, we continue to anticipate that what we’ve seen, which is core PCE inflation, that’s inclusive of services, as well as headline PCE, it has been at 2% on a six-month basis. And there’s every reason to expect that to continue going forward. But do we need to do more to lower prices at the grocery store? Absolutely. That’s really important. If you look at grocery store margins, still very high relative to pre-pandemic. The president’s going to continue emphasizing that input costs have come down, supply chains have healed, and he’s going to keep calling on corporations to pass those savings on to the American consumer.”
She further stated, “So, look, the thing that is most important, of course, is overall inflation coming down to 2%, two-thirds decline. If you look within some of the parts of the CPI print, owner’s equivalent rent diverging sharply from actual rents, market rents, which are coming down. So, again, don’t want to put too much emphasis on one data point. Looking at the overall data picture, inflation down by two-thirds at a time when employment is very strong and growth has been very strong, overall picture, I think, is still very good.”
Brainard added, “Well, if you look at overall supply chains, healed, completely healed. If you look at overall inflation, has come down by two-thirds, input costs have come down. So, it’s really some corporations that are not passing those savings along that are really standing out now. And again, if you look at grocery margins, they’re exceptionally high. They went up during the supply chain disruptions. They haven’t brought them back down, and that’s hurting American consumers. If you look at some of the staples, like eggs or milk, they have come down, but consumer brands, instead of actually lowering prices, they’ve shrunk packaging. That’s the shrinkflation that the president is really calling attention to. We’re going to keep highlighting junk fees, shrinkflation, and asking corporations to pass those savings on so that consumers can see it in their grocery baskets.”
Follow Ian Hanchett on Twitter @IanHanchett
