The high rate of inflation in the United States is devastating to everyday Americans, an expert has warned, calling for the rising prices to be curbed.
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Gilbert Garcia, a managing partner at Garcia Hamilton & Associates in Houston, said the US central bank needs to immediately get the rising inflation rate under control by raising interest rates.
“I wished we’d retire the word ‘transitory,’” Garcia told the CNBC Financial Advisor Summit on Wednesday, speaking of predictions that the recent increases in prices are temporary.
“Inflation is running at 6%, probably well over 6%, no matter how you look at it,” he added. “It’s pretty clear that it’s longer than transitory and it’s much hotter than their inflationary target.”
He went on to say that the Federal Reserve should lift rates, noting that the government is currently keeping them “artificially low.”
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Last week, US Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen admitted that high inflation increased higher and lingered much longer than they had expected.
“Inflation has been more persistent and higher than we’ve expected,” Powell told a hearing before the House Financial Services Committee on December 1.
“We understood demand would be strong,” Powell said. “We didn’t understand [the] significant problems of the supply side.”
The central bank has suggested that it could raise rates earlier than previously expected, with the first spike potentially coming as early as this spring. Ever since the pandemic hit the US in March 2020, rates have been near zero.
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Increasing prices are most hurting those who can least afford it, Garcia said. “Everyday Americans are having a very difficult time with food inflation, which is running very close to 30% and 40%.”
“This 6% inflation is devastating,” Garcia said. “We’ve got to get that inflation back to a more normal, containable level.”
There has been a sharp rise in prices for a wide range of consumer goods this year as manufacturers, shipping companies, suppliers and retailers are finding it hard to keep up with demand amid a minefield of pandemic-related constraints.