"Worried About Food Now, and You Want Us to Buy Expensive Electric Cars?" Cold Response to US Secretary's High Oil Price Measures

One of the regions with the highest gas prices in the United States, gas stations in California
[Image source=Yonhap News]

[Asia Economy Reporter Hwang Sumi] Controversy has arisen over U.S. Transportation Secretary Pete Buttigieg's suggestion to purchase electric vehicles amid growing concerns about inflation caused by high oil prices.

According to Fox News on the 16th (local time), Secretary Buttigieg appeared on the radio program 'Big Boy TV' the previous day and proposed, "If you have an electric vehicle, you can also save on fuel costs."

Secretary Buttigieg argued, "Even if the vehicle price is a bit higher, fuel costs will be lower, and ultimately you will benefit." He also emphasized the need to reduce electric vehicle prices so that more Americans can afford to purchase them.

This appears to be a measure against the recently steeply rising energy prices. However, the response within the U.S. has been cold. In an inflation situation at its worst level in about 41 years, such measures are criticized as overly unrealistic. Robert McLoughlin, CEO of Burnrate, criticized on his Twitter, "How can people buy electric vehicles when they can't even afford food or housing to live right now?"

Meanwhile, the U.S. Consumer Price Index (CPI) for June rose 9.1% compared to the same month last year. This is the highest figure in about 41 years since December 1981 (8.9%). The increase was larger than May's 8.6% and also exceeded the market's initial expectation of 8.8%.

By item, energy prices showed the largest increase. Due to the impact of the Ukraine crisis and others, gasoline prices surged 59.9% compared to the same period last year. In addition, prices for electricity bills (13.7%), groceries (12.2%), and housing rent (5.8%), which are directly related to livelihood, also drove inflation.

As a result, there are forecasts that the U.S. Federal Reserve (Fed) will again raise the benchmark interest rate sharply. Earlier, the Fed, the U.S. central bank, implemented a so-called 'big step' by raising rates by 0.5 percentage points in May this year to curb inflation, followed by a 'giant step' of a 0.75 percentage point increase in June.

However, as the June CPI surpassed the 9% mark, there is analysis that the Fed may implement an even larger increase of 1 percentage point rather than 0.75 percentage points. The Fed plans to hold the Federal Open Market Committee meeting on the 26th-27th to decide on adjusting the current benchmark interest rate of 1.5-1.75%.