© Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen attends a press conference in San Francisco, California, U.S., November 10, 2023. REUTERS/Carlos Barria/File Photo
By David Lawder
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday that consumer price index data for January showed progress in the fight against inflation despite a surge in the cost of shelter that pushed up the index more than was forecast by economists.
Yellen, speaking during an event at a Pittsburgh hospital, focused on the year-on-year CPI inflation figure of 3.1%, not the surprise 0.3% month-on-month surge in January.
“This morning’s CPI report showed that, in January, the headline consumer price index fell to 3.1 percent. That’s six percentage points below its peak in June of 2022,” she said. “At the same time, the recession that many forecasters predicted we would need, to see inflation come down, hasn’t materialized.”
The hotter-than-expected consumer inflation reading helped drive down stocks on Wall Street, pushing back market expectations for Federal Reserve interest rate cuts. The data was somewhat at odds with Yellen’s recent narrative that a “soft landing” for the U.S. economy was under way, with inflation tamed and wage growth outpacing prices pushed up by high post-pandemic inflation.
LOWERING HEALTH COSTS
Yellen stuck to that line in her remarks at the West Penn Hospital in Pittsburgh, where she discussed efforts taken by President Joe Biden’s administration to cut healthcare costs.
“We have made significant progress in our fight to bring down inflation,” with the prices of key household expenditures like gasoline, eggs and airline fares coming in lower,” Yellen said, adding that the U.S. economy continues to grow with a historically strong labor market.
Yellen has traveled across the U.S. this year to promote Biden’s economic policies, from tax credits for household clean energy upgrades in Boston that were funded by the 2022 Inflation Reduction Act (IRA) to job training programs funded by the 2021 American Rescue Plan Act.
In Pittsburgh, Yellen highlighted IRA provisions to allow Medicare, the healthcare program for seniors and the disabled, to negotiate prices for key prescription drugs, which is expected to reduce the deficit by more than $95 billion over a decade.
Tax credits extended by the IRA have lowered health insurance premiums, saving an average of $800 a year for 15 million Americans, Yellen said. The IRA also caps Medicare beneficiaries’ insulin costs at $35 a month and an out-of-pocket cap on Medicare prescription drug costs is projected to lead to annual savings of $400 per person, she added.
“Having affordable health care leads to stronger financial security for middle-class families. It saves Americans and our country money,” Yellen said.