President Joe Biden proudly declared on August 10 that inflation is suddenly pegged at zero percent for July.
"Today we received news that our economy had zero percent inflation in the month of July," he said. "Zero percent. Here's what that means. While the price of some things went up last month, the price of other things went down by the same amount." (Related: Biden's "zero percent inflation" only increases America's suffering.)
However, the Consumer Price Index (CPI) for July was up 8.5 percent compared to the same month last year. And while the CPI was down from 9.1 percent last June, it remains high and far from zero.
The decrease in the inflation rate was brought about by a decrease in gas prices. According to Bloomberg, "while a drop in gasoline prices is good news for Americans, their cost of living is still painfully high, forcing many to load up on credit cards and drain savings."
As per the Bureau of Labor Statistics (BLS), the price of gasoline dropped 7.7 percent in July, but is still up 44 percent for the 12 months ending July, with all energy commodities up 44.9 percent.
Jim Nelles, a supply chain consultant, wrote on the National Pulse: "On August 10, the day the CPI numbers were released, the national average for a gallon of gas was $4.03, down from record highs of $5.02 per gallon, but still higher than the August 2019 average of $2.70 per gallon. That is nearly $80 more a month to fill up a 15-gallon tank on a weekly basis, nearly $1,000 more per year."
But the Chicago-based expert pointed out that the decrease in fuel cost is actually due to a reduction in demand. He cited examples such as Americans putting off summer driving vacations because they can no longer afford them and the futures markets worrying about the nation's economy and the further decline in demand.
Additionally, he said that inflation is clearly not zero percent as an estimated 34 million consumers or about 13 percent spent more than they earned in the past six months. This just showed how Americans are having difficulty managing their finances in the midst of the decades-high inflation.
Food and housing prices, unemployment rate still high
Nelles also pointed out the primary factors that drive the 8.5 percent inflation: cost of food, cost of housing and unemployment rate.
He said the "food at home category, which tracks the cost of groceries, surged 13.1 percent over the last year, which has been the most significant increase since March 1979."
"This food inflation is hitting basic staples, such as eggs, which are up 38 percent, chicken is up 16.6 percent, milk 15.6 percent, potatoes 13.3 percent, rice 12.7 percent and fresh fruits and vegetables 8.2 percent," he added.
Meanwhile, home prices increased by 5.7 percent over the same month last year, the highest year-over-year jump since February 1991.
While non-farm payroll employment rose by 528,000 in July and the unemployment rate edged down to 3.5 percent, Nelles noted that "if you dig into the numbers, it is not all good news." He pointed out that labor force participation rate is at 62.1 percent and the employment-population ratio is at 60.8 percent – both below their pre-pandemic levels.
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