WASHINGTON, D.C. – By now, all of us are noticing rising prices in our every day lives. From the pump to the produce section, inflation is hitting us.
Overall, prices are up 5.4 percent from a year ago with some industries, hit harder than others. Food is up an average of 2.5 percent from last year, according to the Consumer Price Index. Gas along with used cars and trucks, are each up 45 percent.
“I’m very concerned about this,” said Sen. Patrick J. Toomey (R-Pa.)., ranking member of the Senate Banking, Finance, and Urban Affairs Committee.
Toomey says there are two main causes for the cost increase. First, a bottleneck between supply and demand in some sectors is one cause, which could fix itself in the coming months. But, Toomey believes a larger problem looms: artificially low interest rates, and too much money pumped into the economy by the Federal Reserve.
“The Fed has this ongoing program of buying $120 billion of securities every month, month in and month out, even though the economy doesn’t need this,” Toomey explained.
“We’re tracking this extremely closely,” said Jared Bernstein, a member of the White House Council of Economic Advisors, when asked if the White House concerned about inflation. “I would say this is probably the issue I pay the most attention to.”
Bernstein noted some prices have already dropped. The price of lumber, on Tuesday, fell once again, now down 65 percent from its record high earlier this year.
“We’ve never turned a $21 trillion economy off and then on again,” said Bernstein, echoing a similar message to Fed Chairman Jerome Powell. “So, we don’t have a great historical record.”
The White House is following inflation for both the short-term and long-term, Bernstein added. Some economists are projecting inflation to grow more slowly next year than it is this year.
“I don’t think waiting it out works,” Toomey said. “What you’ve got to do is stop the Fed policy that’s causing it.”