American families have spent around $3,500 more in 2021 to buy the same products as they had in recent years, according to a new Penn-Wharton analysis. Worse, lower-income families have had to spend more than their better off counterparts. Yet the Biden White House has either ignored or attacked critics for raising concerns about inflation, and tried to claim such inflation is merely “transitory,” although the Federal Reserve is now discouraging use of that term.

Key Excerpts:

• “We estimate that inflation in 2021 will require the average U.S. household to spend around $3,500 more in 2021 to achieve the same level of consumption of goods and services as in recent previous years (2019 or 2020).”
• “Moreover, we estimate that lower-income households spend more of their budget on goods and services that have been more impacted by inflation.”
• “Lower income households will have to spend about 7 percent more while higher income households will have to spend about 6 percent more.”

Key Background:

• The San Francisco Federal Reserve has found that President Biden’s so-called “stimulus” contributed to inflation and worsened the labor shortage. (Analysis)
• A top Federal Reserve official warned in October of growing risks of inflation, including from additional government spending being contemplated by the Biden administration. “If those dynamics should lead this “transitory” inflation to continue too long, it could affect the planning of households and businesses.” 
• The IMF announced that the U.S. is tied for the highest level of inflation among the top 35 developed economies.

Read more: IMF: U.S. Tied for Highest Level of Inflation Among Top 35 Developed Economies

• The National Federation of Independent Business found that a historically high number of small businesses are being forced to raise prices. Read more: Price-mageddon: Historically High Number of Small Businesses Forced to Raise Prices
• Wholesale prices increased at their quickest pace on record in November, adding to the strain on budgets caused by headline consumer prices running at their fastest pace in nearly 40 years and core inflation the hottest in about 30 years.

• The Producer Price Index (PPI) shows a record price increase for producers, by 9.6 percent, above expectations and the largest increase since first calculated in November 2010 when the series started.