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| - As the 2024 U.S. presidential election campaign gathered momentum in June, President Joe Biden defended his record by saying inflation had slowed to its lowest level since April 2021 and food prices had dropped:
The White House released a statement to that effect on June 20, 2024:
In this post, we show that grocery inflation is, in fact, way down from its recent peak, some grocery prices have fallen, and because wage growth has been strong, grocery purchasing power is up.
As we'll see, these claims are true, though they require a bit more context.
As Biden asserted and as we've covered before, the consumer price index in May 2024 was 3.3% higher than a year earlier, which was lower than the rate of increase of wages of 4.1% in the same period.
The inflation rate also remained between 3.0% and 3.7% for 13 months since May 2023, substantially lower than the 4.2% of April 2021.
The cost of groceries, too, had stayed flat since February 2024, even falling in April 2024, according to the U.S. Bureau of Labor Statistics. In the 12 months leading to May 2024, grocery prices rose 1.0%, far more slowly than core inflation:
(BLS)
Biden was comparing the current economic situation with what it was earlier in his term in office, but taking a broader view revealed that while prices were rising more slowly in 2024 than in 2021, absolute prices shot up in the first year of Biden's mandate. They soared in ways not seen since the early 1980s, when inflation reached 13.5%. According to investment company Madison Trust, inflation in 2022 was 8.0%, far above the yearly average of 3.7% between 1960 and 2022.
While prices in the U.S. fell for three months at the beginning of the COVID-19 pandemic (March to May 2020), the four-year increase that followed was of 22.4%, or an average of about 6.7% annually.
Overall, since April 2021, the CPI had increased 17.4%. For comparison, between April 2019 and April 2021, prices increased 4.5% — the same as between April 2017 and April 2019.
The CPI is the price index of a basket of goods and services. According to the St. Louis Federal Reserve Bank, it includes "food, clothing, shelter, and fuels; transportation fares; service fees (e.g., water and sewer service); and sales taxes. Prices are collected monthly from about 4,000 housing units and approximately 26,000 retail establishments across 87 urban areas."
As we've reported before, inflation and the job market were key points in the campaign that between Biden and former President Donald Trump.
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