Congressional Budget Office: High inflation in the US will last until 2023

The U.S. Congressional Budget Office (CBO) released its economic outlook on Wednesday, which said inflation would continue next year.

The CBO expects the consumer price index to rise by 6.1% this year and by 3.1% in 2023. This forecast suggests that inflation will slow from current annual levels of 8.3%, but will still be dramatically above the long-term key level of 2.3%.

The 10-year estimates contain positive news, as the annual budget deficit this year will be $ 118 billion lower than last year.

As a percentage of the total economy, public debt will decline by 2023. However, the accumulated federal debt is likely to continue to grow over the next decade, amounting to approximately 110% of US GDP.

The US Federal Reserve (Fed) is trying to curb inflation by raising interest rates, with the result that 10-year bond yields have risen significantly in recent months.

One consequence is that the government will spend more money this year to service its debt.

However, the CBO warns that its numbers “are subject to considerable uncertainty, in part due to the ongoing pandemic and other global events”, including the war in Ukraine. The report takes into account at least the first months of the war, according to the CBO.

Economists say coronavirus relief programs issued by both the Biden administration and the Trump administration have contributed to higher levels of inflation. But high prices have also been fueled by delays in the Fed, disruptions in supply chains and unrest that sparked a non-Russian invasion of Ukraine in February.