WASHINGTON—The White House more than doubled its forecast for annual inflation in new projections released Friday, as supply chain disruptions stemming from the Covid-19 pandemic continue to put upward pressure on prices.
The Office of Management and Budget said it expects consumer prices will rise 4.8% in the fourth quarter from a year earlier, up sharply from the 2% rise that the Biden administration forecast in May. Officials see those price pressures quickly abating next year, with the consumer-price index rising 2.5% in the fourth quarter of 2022, more than the 2.1% they expected in May, and reaching 2.3% in 2023.
Those updated projections are consistent with other independent forecasts, including from the Federal Reserve, and reflect the administration’s view that price pressures, while higher than expected earlier this year, are likely to fade over time, administration officials said Friday.
“We think this trajectory is very much consistent with the inflation outlook we’ve been discussing pretty much since we got here,” one official said on a call with reporters.
Recent data suggest inflation pressures may have started easing but remain elevated. Consumer prices rose 0.4% last month, lower than the prior month’s 0.5% gain, according to the Federal Reserve’s preferred inflation gauge. Compared with a year ago, overall prices rose 4.2%.