Despite a hopeful dip from a near four-decade high in July, new Labor Department inflation data released Wednesday prompted progressive economists and experts to double down on their calls for congressional action against corporate price gouging.
The Consumer Price Index (CPI) was up 8.5% in July compared to a year earlier, down from 9.1% in June—a potential sign that roaring inflation has peaked. CPI was completely flat in July on a monthly basis, with falling gas prices playing a decisive role in the better-than-expected figures.
"Costs are coming down for companies, but they have no plans to pass those savings back to consumers."
But while the new report, which President Joe Biden readily touted, offered some encouraging signs of moderating prices, persistently high and still-rising food costs and other worrying metrics sparked fresh calls for Congress to pass legislation to prevent corporations from continuing to unfairly jack up prices.
"To truly see recovery on prices for consumers, policymakers need to hold companies accountable for price gouging and rein in the corporate profiteering that is driving painful prices and record profits," said Lindsay Owens, executive director of the Groundwork Collaborative.
The latest inflation numbers come as the Federal Reserve appears poised to continue hiking interest rates aggressively in its bid to bring inflation down to the central bank's 2% target, despite the growing risks of hurling the U.S. economy into a damaging recession.
But economists and progressive lawmakers have stressed that interest rate hikes will likely have little to no impact on key drivers of inflation, which has been fueled by companies pushing up prices in pursuit of greater profits.
In her statement Wednesday, Owens pointed to recent earnings calls in which the executives of major companies have made clear that they intend to continue pushing higher prices onto consumers even as gas prices and other operational costs fall.
"Today's inflation report contains a lot of good news—energy prices are coming down and inflation in goods and services is cooling off," said Owens. "But a key question remains: When will consumers begin to see relief? One answer to this question can be found in corporate earnings calls, where CEO after CEO is essentially telling consumers, 'Don't hold your breath.'"
"Costs are coming down for companies, but they have no plans to pass those savings back to consumers," said Owens. "Instead, many plan to move forward with further price increases—using this opportunity to push profits even higher."
In a second-quarter earnings call last month, the chief financial officer of manufacturing giant Kimberly-Clark said that "based on what we know today, we will continue to expand margins."
A top Kraft Heinz executive, meanwhile, said that "as we continue to price inflation," easing price pressures across the overall economy "might put us in a better position for us to continue to recover the margin"—a suggestion that the company's prices will remain elevated even as inflation eases.
In recent months, Democratic lawmakers have proposed several bills aimed at curbing corporate price gouging, including one that would impose a windfall tax on oil companies that have seen booming profits this year.
"Targeted price stabilization is an essential ingredient to weather the storms ahead."
On Sunday, the Senate passed the Inflation Reduction Act, legislation that includes modest provisions requiring Medicare to negotiate the prices of a small number of expensive prescription drugs.
"Inflation is slowing down and gas prices are falling," Sen. Elizabeth Warren (D-Mass.) tweeted Wednesday. "We're moving in the right direction. And the Inflation Reduction Act will keep bringing down costs for working families."
But in a column for the Washington Post on Tuesday, historian Meg Jacobs and economist Isabella Weber urged Congress to get much more aggressive by imposing "selective price caps combined with investments to increase the resilience of our economy."
"Many economists warn that price controls never work. But history says that's not true," Jacobs and Weber argued. "Targeted controls combined with large-scale investments present a real alternative to the potent sort of stagflation—high inflation and a stagnant economy—that wreaked havoc in the 1970s and threatens us now."
"Our age of emergencies requires an economics of disaster preparedness," they continued. "Targeted price stabilization is an essential ingredient to weather the storms ahead and to realize the investments so urgently needed."
This content originally appeared on Common Dreams - Breaking News & Views for the Progressive Community and was authored by Jake Johnson.