While the U.S. inflation rate has dropped to nearly half of what it was a year ago, ending 2023 at 3.4%, many in the public are still feeling the pinch of high prices, particularly at the grocery store.
And in a presidential election year, political rhetoric about the economy and inflated prices is heating up. President Joe Biden made headlines this week after making comments at a political rally in South Carolina on Jan. 27, where he took aim at corporations for artificially inflating prices.
“Inflation is coming down. It’s now lower in America than any other major economy in the world. The cost of eggs, milk, chicken, gas, and so many other essential items have come down,” Biden said. “But for all we’ve done to bring prices down, there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation.”
Biden went on to say that price gouging is “going to stop.”
“Americans, we’re tired of being played for suckers. And that’s why we’re going to keep these guys — keep on them and get the prices down,” he said.
The comments prompted an article in the New York Times that cites a 2019 study by the National Bureau of Economic Research that shows the cost of grocery staples like eggs and milk “play an outsized role in shaping Americans’ views of inflation.”
That report, however, contends that the inflation index most policymakers most closely watch does not include grocery costs.
“The influence of grocery shopping on expectation formation is particularly striking because the inflation index on which U.S. policy makers mainly focus, the Core Consumer
Price Index, excludes grocery prices.The rationale for the exclusion of food (and energy) prices is that those categories are particularly volatile, reflect supply shocks that are
unrelated to trend changes in the economy’s overall price level, and tend to reverse quickly,” The NBER report states.
Inflation numbers nationwide are only part of the story, though. A recent analysis by Consumer Affairs magazine shows that hikes in grocery prices vary greatly from state to state across the U.S.
That report, released in December of 2023, analyzed grocery prices in 15 categories across 150,000 stores, revealing that Pennsylvania had the highest hike in grocery prices at 8.2%, while Colorado had the lowest price increase at 2.9%. The rate of inflation on groceries was even lower in some cities, the report showed.