Yellen calls US inflation 'unacceptable'

WASHINGTON - The United States faces "unacceptable levels of inflation" and an appropriate budgetary stance is needed to help dampen inflationary pressures, US Treasury Secretary Janet Yellen told senators on Tuesday.

Yellen said in prepared remarks to the Senate Finance Committee that elements of President Joe Biden's proposed spending legislation could help lower costs for US citizens, including for prescription drugs and clean energy initiatives.

"We currently face macroeconomic challenges, including unacceptable levels of inflation as well as the headwinds associated with the disruptions caused by the pandemic's effect on supply chains, and the effects of supply-side disturbances to oil and food markets," Yellen said.

Yellen had come under fire from Republicans after admitting she was "wrong" last year about the path inflation would take and is expected to face a tough grilling before the Senate panel as price hikes reach 40-year highs.

Her testimony came as the World Bank on Tuesday warned of a heightened risk of stagflation - the 1970s mix of feeble growth and high inflation - returning as it slashed its global growth forecast by nearly a third to 2.9 percent for 2022.

Consumer Price Index inflation in the US has been tracking above 8 percent. Another metric, the Personal Consumption Expenditures price index, which the Fed monitors for its 2 percent target, measured inflation at 6.3 percent in April. Excluding volatile food and energy costs, the PCE fell to 4.9 percent that month.

Target missed

In April, core CPI in the US rose 6.2 percent. Fed policymakers target a 2 percent inflation rate, though that is tied to a separate gauge of prices that averages somewhat less than CPI. Economists forecast May's core CPI figure, due on Friday from the Bureau of Labor Statistics, at 5.9 percent, according to the report.

The latest ABC News/Ipsos poll showed that approval rates on the current US administration's handling of economic recovery have stayed low.

Only 37 percent approve of Biden's handling of economic recovery, 28 percent of his handling of inflation and 27 percent of gas prices, said a report on the poll published on Sunday by ABC News.

The poll showed that those three issues - economic recovery, inflation and gas prices - are the most important ones for people to decide how they will vote in the November midterm elections.

According to the poll, 83 percent of respondents said the economy is either an extremely or very important factor in determining how they will vote, while the numbers are 80 percent and 74 percent for inflation and gas prices respectively.

"Joe Biden's approval ratings for his handling of these key issues are all well underwater, suggesting trouble for the president and Democratic candidates ahead of the midterm," it added.

Agencies - Xinhua