Today, the Bureau of Labor Statistics released the Consumer Price Index (CPI), which measures the change over time in the price of consumer goods. The new numbers for March 2022 show a 1.2% rise in the cost of goods and services from February, up 8.5% in the last year – a 40-plus year high and the steepest inflation pace since December 1981 – with energy and food being the largest contributors to rising prices.
The alternate “corrected” CPI estimate hit 17.15% (up from 16.05% in February), the steepest inflation rate since June 1947 – in 75 years. The Corrected CPI for inflation is calculated the same way it was in 1990. Methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
Nobel Prize-winning economist Milton Friedman famously called inflation “always and everywhere a monetary phenomenon.” With inflation occurring when too much money chases too many goods, any study of the current inflation spike must start with the Federal Reserve’s role.
Only fiscal discipline will stop runaway inflation from coursing through the system, which means a halt on money-printing. As Steve Forbes suggests, “the two principal inflation fighters—the Federal Reserve and the White House—are floundering.”
With regards to the role of the White House to fight inflation, the U.S. Chamber of Commerce urges a renewed focus on a few key areas of concern.
Following the release of March’s CPI data, Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce, released the below statement:
“New data out today shows what Americans already know: inflation continues to chip away at their buying power and impact the larger workforce. Rising costs in housing, food, and energy are making it difficult for American families and businesses to get ahead, and while monetary policy remains the best tool to fight inflation, policymakers should also be focusing on easing regulations, reducing tariffs, and increasing domestic energy production.”
U.S. Chamber urges eased regulations, reduced tariffs, and increased domestic energy production to combat historic inflation
Bradley asserts, “Rising energy costs continue to impact consumers and businesses, and the administration’s lack of commitment to increased production is hampering our ability to lower costs and improve energy security. The energy industry needs assurances from the administration that increased investment now will not be met with efforts to decrease or end production in the years ahead.”
“The administration must end its ban on leasing on federal lands, expeditiously begin processing permits, and finalize a new offshore leasing program. Additionally, the U.S. must focus on approving critical energy infrastructure projects. This all can, and must, be done with an emphasis on reducing emissions globally and transitioning to non-emitting energy sources, but policymakers must work with the industry now to ensure our energy security going forward,” he adds.
Policymakers blame businesses for rising prices
“We also remain concerned that the administration and some policymakers continue to blame businesses for rising prices. Inflation is the result of supply and demand,” says Bradley.
“Pandemic-related shocks, a tight labor market, and loose monetary and fiscal policy have limited the supply of many goods and at the very same time boosted demand. This has created broad-based price increases. To shift the blame to businesses is misguided and only increases the likelihood that the real causes of inflation will not be addressed, prolonging and exacerbating higher prices for families and risking a recession.”
Index reaches pandemic-era high as inflation concerns grow
On March 29th, MetLife and the Chamber released their 2022 Q1 Small Business Index Report. The report found that while small business owners are feeling good about the health of their businesses and expectations for the future, concern for inflation soared.
The vast majority (85%) of small business owners are concerned about the impact of inflation, and 44% indicate they are very concerned, jumping 14 percentage points from 31% last quarter. More than two in three businesses (67%) report having to raise prices to cope with inflation. The survey was conducted between January 14 and January 26, 2022, in the wake of the Omicron variant.
The survey found that while COVID-19 remains a persistent challenge for small businesses, inflation and supply chain issues are top of mind for most small businesses.
The U.S. Chamber of Commerce is the world’s largest business organization representing companies of all sizes across every sector of the economy. Our members range from the small businesses and local chambers of commerce that line the Main Streets of America to leading industry associations and large corporations. They all share one thing: They count on the U.S. Chamber to be their voice in Washington, across the country, and around the world. For more than 100 years, we have advocated for pro-business policies that help businesses create jobs and grow our economy.
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