The Biden Administration painted a bleak outlook for Tuesday’s much anticipated consumer inflation report. The administration expects inflation to stay “extraordinarily elevated” over the next few weeks and months, largely due to soaring energy costs. White House Press Secretary Jen Psaki placed the blame primarily on Vladimir Putin.
Psaki said Monday that the Labor Department’s previous report, which showed prices rising at an already dramatic rate in February, failed to include the majority of the jump in oil and gas costs caused by the conflict in Ukraine. Energy prices were already increasing but have skyrocketed past record highs as the conflict continues. The U.S. and its European allies have placed crippling sanctions on Kremlin oil that are causing domestic energy prices to spike.
“We expect March CPI headline inflation to be extraordinarily elevated due to Putin’s price hike,” Psaki told reporters. We expect a large difference between core and headline inflation,” she continued, “reflecting the global disruptions in energy and food markets.”
The Bureau of Labor Statistics is set to issue its March update to the consumer price index on Tuesday, which measures what consumers pay for goods and services.
According to CNBC, “economists consider two versions of the CPI data: The headline number that includes all prices consumers face, and a so-called core CPI that excludes often volatile food and energy price fluctuations.”
The White House expects “a wider-than-normal disparity between the headline and core readings because of an abnormal increase in gas prices” last month. The price for a gallon of gasoline reached $4.33 on average last month, a record high, but has since decreased to $4.11 according to a recent AAA report. “At times, gas prices were more than one dollar above pre-invasion levels, so that roughly 25% increase in gas prices will drive tomorrow’s inflation reading,” Psaki said.
Labor Department data has recorded inflation levels not recorded since the 1980’s. Inflation in January accelerated to a 7.5% annual rate, marking a 40-year-high. The March report is due out on Tuesday at 8:30 a.m. ET.