Yellen: Biden’s Inflation Forecast for 2023 Needs to Be Higher Than 4.7% Cited in Budget

WASHINGTON, (Sputnik) - President Joe Biden’s inflation forecast of 4.7% in the 2023 budget likely needs to be revised higher as current price pressures are almost double to that and unlikely to moderate in time to reach levels in the budget estimate, Treasury Secretary Janet Yellen said in a congressional hearing on Tuesday.

“We're in the process of producing a new forecast, for the mid-session review [of the budget],” Yellen told a US Senate Finance Committee hearing on the the 2023 budget projections. “The numbers aren't locked in but it's likely to be higher [for inflation].”

Yellen also said the United States was experiencing “unacceptable” levels of inflation as a result of the Ukraine conflict and the Biden administration is seeking to dampen the runaway growth in prices without hurting the resilient US labor market.

“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 resulting from Russia's war in Ukraine,” she said.

After tumbling 3.5% in 2020 due to the complications caused by the coronavirus pandemic measures, the US economy expanded by 5.7% in 2021, growing at the fastest pace in 40 years. But inflation grew even faster.

The Consumer Price Index (CPI), a major price gauge, expanded by 7.5% last year, also at its fastest in four decades, due to lingering supply constraints caused by the pandemic.

This year, the CPI has expanded more aggressively, growing at an annualized rate of 8.5% in March before moderating to 8.3% in April. The Federal Reserve's target for inflation is 2% per year.