Yellen said the price increases have been “substantial,” rapid and noticeable to consumers, the Financial Times reported Thursday.
The Consumer Price Index is up more than 19% since President Joe Biden took office, interest rates are the highest they’ve been in 23 years, and inflation remains above the Federal Reserve’s target of 2%, the report said.
While inflation has been a global problem, it has lasted longer in the United States because of a strong labor market and fiscal stimulus programs, according to the report.
“The cost of living is a problem to a lot of people,” Yellen said, per the report. “So, I think this is a concern that people legitimately have.”
Yellen said the Biden administration has responded to the price increases by combating “junk fees” and by criticizing companies for “shrinkflation,” per the report.
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The report came days after the Federal Reserve released a report showing that inflation remains the top financial concern of consumers. It found that 65% of consumers said higher prices have hurt them financially, with 19% saying their situations were “much worse.”
The latest Index of Consumer Sentiment published by the University of Michigan found that consumers are souring about the near-term outlook on inflation, job prospects and interest rates.
The index dropped to its lowest reading in six months, with consumers’ year-ahead inflation expectations rising from 3.2% last month to 3.5% this month and long-term inflation expectations inching up from 3% last month to 3.1% this month.
PYMNTS Intelligence found in January that just 18% of wage earners said their incomes have kept up with inflation. Even among high earners, only 27% said that was the case, according to “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck.”
The report also found that 62% of all consumers, and more than one-third of those earning more than $200,000 a year, said they live paycheck to paycheck.
