While the Biden Administration is in a self-congratulatory mood about today’s year-end Producer Price Index (PPI) of 6.2%, a closer look at the data and recent history tells a more complicated and discouraging story. PPI, which measures the average change over time in the prices producers pay, is significant because the producer’s price influences what consumers will pay down the line. Today’s number is troublesome for the American people for a variety of reasons.

First, let’s clarify one thing: inflation is still here and is creating terrible consequences for American families. Core inflation within the PPI, which tracks non-volatile commodities, has remained more than double the target set by the Federal Reserve. The fall in the overall inflation rate is due to highly volatile gas prices, which are beginning to increase again.

Additionally, today’s numbers mark the second year in a row of rapidly increasing prices. The 6.2% increase is the difference in prices during the one year from December 2021 to December 2022—after prices had already risen 7% over the year before. Overall, the total PPI increases since the beginning of the Biden Administration are already nearly twice the total inflation of 8.3% during the previous four years.

The monthly inflation numbers have indeed come down in the latter part of 2022, but inflation is still running too high, and the moderation that has occurred is despite the Biden Administration’s policies, not because of them. The Federal Reserve’s actions in rapidly hiking rates are contributing to cooling off pricing pressures, but its tough medicine for our Nation’s problems acts as a drag on economic activity. This is seen particularly in the housing market, but it is also manifested in slower economic growth in 2022 compared to 2021.

America could have mainly avoided this tough medicine had the Biden Administration embraced a pro-growth, supply-side agenda. This type of agenda would have helped get people back to work and ramp up energy production instead of saturating the economy with borrowed government money and actively erecting barriers to productive economic activity. After all, inflation can be thought of as too much money chasing too few goods. The Federal Reserve can drain money out of the economy, but even better would be for America to increase production again to make more goods—thereby alleviating inflation and improving growth.

The White House is touting today’s news and spinning it as a positive culmination of its liberal policies. However, when the American people look at the hard data and the actual price differences from two years ago, they see it does not align with the tale the Biden Administration is spinning.

If the Biden Administration continues to exaggerate the importance of slightly better PPI numbers without addressing the real problems of its own making, the American people will continue to be the ones hurt the most. A decision to take that approach would surely be one our country cannot afford.

Linda McMahon is the Chair of the Board and Chair of the Center for the American Worker at the America First Policy Institute. She previously served as the Administrator of the Small Business Administration.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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