Yellen sees lower gas prices putting downward pressure on U.S. inflation

6:21 pm Thursday, September 08th, 2022

By David Lawder

DETROIT (Reuters) – U.S. Treasury Secretary Janet Yellen said falling gasoline prices may put further downward pressure on headline consumer price inflation for August but there is a lot of uncertainty over the inflation outlook due to Russia’s war in Ukraine and energy supplies.

Speaking to reporters in Detroit, Yellen said she also was concerned about the global outlook due to an acute energy crisis in Europe.

“Gas prices have been falling now for essentially 80 days in a row, which is certainly good news,” Yellen said. “And it caused headline inflation to actually go into negative territory in July and I think there will be some further impetus in the next report — gas prices have continued to fall.”

The Commerce Department is due to report Consumer Price Inflation for August on Sept. 13.

But Yellen declined to speculate on a longer-term outlook for inflation, citing uncertainties over Russia’s war against Ukraine but said the Federal Reserve was taking action “and will do what’s needed to get inflation under control.”

Yellen expressed concern over the global outlook due to the deepening energy and economic crisis in Europe and said the United States was taking action to increase the supply of liquefied natural gas to Europe.

She said it was important that Europe was trying to wean itself off of Russian energy, but energy was a long-term matter for the continent.

“We’re doing everything we can on the LNG front to be helpful. And, of course, we continue to coordinate on price cap that with respect to (Russian) oil, which I think can also be helpful.”

Asked whether the Biden administration was still considering removing some tariffs on Chinese imports as a way to lower costs, Yellen said that President Joe Biden was still considering the issue.

“He wants to make sure that what he decides is good for American workers,” Yellen said, adding that it was important economically to take a tough stance against China’s non-market practices. “China has really been guilty of unfair trade practices. We’ve all agreed on that. And he really wants to consider it carefully. I don’t have a timetable for it.”

(Reporting by David Lawder; Editing by Chris Reese and Diane Craft)