MARY LOUISE KELLY, HOST:
Prices at the gas station and at the grocery store keep going up in the United States. That is putting a strain on people's pocketbooks, even as wages are rising, too. The Labor Department said today that inflation in July matched its highest level in nearly 13 years, though there are some signs that the spike in prices may be peaking. Well, for more, we've got NPR's Scott Horsley here.
SCOTT HORSLEY, BYLINE: Good afternoon.
KELLY: All right, where are we seeing these big price increases?
HORSLEY: Gasoline prices are up really sharply, more than 40% over the last year. Rents are also going up, and food keeps getting more expensive, especially food that you eat outside your home. The price of restaurant meals jumped almost a full percentage point between June and July. That's the sharpest one-month increase in four decades.
KELLY: And why? Do we know why prices are rising so fast?
HORSLEY: Yeah, we've seen a really strong rebound in consumer demand during the uneven recovery from the pandemic recession, and supply has just not kept up, so that's a recipe for rising prices. Now, as you mentioned, this may be the high watermark for inflation. Prices in July were up 5.4% from a year ago. That's the same as June, which was the highest since 2008. But the price increase between June and July was only about half as big as the month before, so we might see inflation cooling off in the months to come. Some of the prices we've been watching carefully actually came down last month.
KELLY: Oh, that's interesting. Like what? What - where are prices dropping?
HORSLEY: Well, the price of rental cars and airline tickets came down in July. The price of used cars also appears to be leveling off. All of those had been big drivers of inflation earlier in the year, and the fact they're no longer pushing the price index up supports the argument that both the Biden administration and the Federal Reserve have been making, that a lot of these inflationary pressures are temporary. They're the result of, you know, pandemic shortages in things like computer chips that eventually will work themselves out. Now, that said, the Biden administration is taking pains to let people know they're on top of this and that they're watching inflation very closely because there's a lot at stake, you know, for family budgets.
HORSLEY: The average wage increase over the last year was about 4%. So if inflation is 5.4%, that completely wipes that out.
KELLY: I got to ask you, Scott, as a former White House correspondent, about the politics here. You said the Biden administration is at pains to be seen as being on top of this. They're worried about - what? - political liability for the president?
HORSLEY: Yeah, it is a potential liability if these prices prove not to be temporary. Certainly, Republicans are trying to score some points here. They're trying to blame higher inflation on the big spending bills that have been pushed by the president and by congressional Democrats. And there are some signs that the White House is feeling that heat, especially when it comes to gas prices, which often have an oversized psychological impact. The president acknowledged this afternoon that gas prices are higher than he would like, even if they're not as high as they were back in, say, 2014.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT JOE BIDEN: Today, gas prices are lower than they were early in this decade, but they're still high enough to create a pinch on working families.
HORSLEY: So the administration kind of put on a show today, urging OPEC and its allies to boost crude oil production faster than they've already promised to do so. And the White House is also calling on the Federal Trade Commission to look into whether there are some other forces that might be pushing gasoline prices up. I have to say, though, these are the kind of things politicians often do when gas prices are in the headlines, and they're really more symbolic gestures than anything else.
KELLY: NPR's Scott Horsley.
Thank you, Scott.
HORSLEY: You're welcome.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.