Biden facing increasing pressure as inflation hits record high

Soaring petrol costs and geopolitical factors could keep prices high in the coming months

US President Joe Biden gestures after speaking during a visit to the Port of Los Angeles in California. Reuters

US inflation hit a new 40-year high in May, piling more pressure on President Joe Biden as Americans grapple with higher prices at the pump and in grocery stores.

The consumer price index increased by 8.6 per cent from a year earlier, Labour Department data showed on Friday. The widely followed inflation gauge rose by 1 per cent from a month earlier, exceeding all estimates. Shelter, food and petrol were the largest contributors.

"I understand Americans are anxious. And there's good reason," Mr Biden said in remarks from the Port of Los Angeles in California.

Friday's report was released before an expected second half-point increase from the Fed next week. The US central bank has raised the rate by 75 basis points since March.

Mr Biden renewed his call to Congress to pass legislation that would free up supply chain bottlenecks, which he claimed was key to fighting inflation. Americans fully understand the supply chain now, he said.

The president has sought to fight back against Republican criticism that his administration has exacerbated inflation by being too generous with government aid.

Mr Biden also blamed "[Russian President Vladimir] Putin's price hike" for the soaring cost of petrol and said more must be done to cut down core inflation.

Record petrol prices and geopolitical factors threaten to keep inflation high in the coming months, suggesting the Federal Reserve will have to pump the brakes on the economy for longer.

And two thirds of Americans expect inflation to worsen in the months ahead, a new poll conducted by The Washington Post shows.

Speaking to US senators earlier this week, Treasury Secretary Janet Yellen urged Congress to enact higher taxes on the wealthy and invest more in renewable energy resources, which she said could mitigate soaring petrol prices.

“I believe there's a lot that Congress can do to ease the cost burdens that households are experiencing,” she said.

Treasury Secretary Janet Yellen speaks before the House Ways and Means Committee during a hearing this week. AP

In the 12 months to May, the CPI increased by 8.6 per cent after rising by 8.3 per cent in April. Economists had hoped the annual CPI rate had peaked in April.

Underlying inflation was equally strong last month as rents and airline fares maintained their upwards march.

Excluding the volatile food and energy components, the CPI climbed 0.6 per cent after advancing by the same margin in April.

The so-called core CPI increased 6.0 per cent in the 12-months to May. That followed a 6.2 per cent rise in April. Inflation by all measures has far exceeded the Fed's 2 per cent target.

Agencies contributed to this report