Americans can expect the surge in consumer prices squeezing family budgets will continue in the months ahead, Treasury Secretary Janet Yellen told lawmakers on Tuesday.
"I do expect inflation to remain high, although I very much hope that it will be coming down now," Yellen said at a hearing before the Senate Finance Committee.
Yellen acknowledged that she and Federal Reserve chair Jerome Powell, head of the country’s central bank, "could have used a better word" than "transitory" last year when they said initial signs of the rising prices for consumer goods would not last for long.
Now, government statistics show there has been an 8.3% jump in consumer prices in the U.S. over the last year, the biggest increase in four decades. Rising food prices, increased apartment rental bills and especially the cost of gasoline at service stations —the highest on record — have U.S. consumers complaining.
President Joe Biden, facing the prospect that his Democratic Party could lose its slim control of Congress in the November elections because of concerns over inflation, has called cutting the increase in prices the country’s most pressing issue.
Yellen echoed the same thought, telling lawmakers, "I think that bringing inflation down should be our No. 1 priority."
The Treasury chief told CNN last week she did not fully understand how unexpected developments in the economy would affect inflation, such as supply chain bottlenecks that periodically have made some consumer goods hard to find.
"Look, I think I was wrong then about the path that inflation would take," she said.
"We now are entering a period of transition from one of historic recovery to one that can be marked by stable and steady growth," she said. "Making this shift is a central piece of the president's plan to get inflation under control without sacrificing the economic gains we've made."
Hundreds of thousands of new jobs have been added to the U.S. economy month after month following the brief 2020 recession when the coronavirus first swept into the country and led to massive employee layoffs. The current U.S. unemployment rate is 3.6%, near a five-decade low.
While the inflation rate has shown some indications of moderating slightly, analysts say it is likely to remain far above the Fed's 2% target through the end of this year.
In a recent report, the nonpartisan Congressional Budget Office said it expects the consumer price index to rise 6.1% this year and 3.1% in 2023.
