Under Joe Biden, is inflation coming down or are prices much higher? Both

If you’ve been listening to the political rhetoric about inflation, you might assume that Democrats and Republicans are on different planets — and that one of the sides isn’t telling the truth.

Consider dueling comments in recent days by President Joe Biden and former New Jersey Gov. Chris Christie, who is running for the Republican presidential nomination.

During a July 28 visit to Maine, Biden said that inflation is "down from 9% to 3%."

Two days later, Christie said on CNN’s "State of the Union" that "everything is 17% more expensive today than it was when he took the oath of office."

There’s no doubt that inflation has been high under Biden. It hit four-decade highs last summer, with economists blaming post-pandemic supply-chain problems, exacerbated by high federal aid to Americans, which bolstered demand for products and services when supply was still recovering.

As it turns out, both Biden and Christie are right — they are just using two different statistical approaches to make their argument. Biden emphasized inflation’s decline, while Christie focused on inflation’s lingering effects.

"Both are fair, and both are correct," said Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank.

Biden’s statement is based on how much inflation has changed year over year. This is a common data point for policymakers and news outlets.

To make this calculation, you start with the most recent level of the consumer price index — the federal government’s standard measure for how much a consistent basket of goods has changed in price every month. Year-over-year inflation refers to how much the inflation level has changed from one year ago on a percentage basis. 

According to this year-over-year measurement, inflation was under 2% when Biden was inaugurated in January 2021. It then rose dramatically, peaking at about 9% in June 2022. In June 2023, it fell to about 3%.

So, by Biden’s reckoning, inflation is heading in a good direction, and if trends continue, it should soon be back at the Federal Reserve’s target inflation rate of 2%.

Republican presidential candidate and former New Jersey Gov. Chris Christie addresses a July 24, 2023, at Veterans of Foreign Wars Post 1631 in Concord, N.H. (AP)

Christie, by contrast, is looking at inflation’s cumulative effect during Biden’s watch. That’s an important concern, because even as inflation slows, people are still paying more for goods.

To calculate Christie’s statistic, you take the current level of the consumer price index, subtract the level for January 2021 — Biden’s first month in office — and divide the difference by the January 2021 level. This shows how much inflation has cumulatively increased since January 2021.

The result is a bump of about 16%, which is close to what Christie said.

It’s worth noting that this period covers about two and a half years. On an annual basis, that would be a bit over 6% rise in inflation. That fits: It’s about halfway between the high and low Biden mentioned, 9% and 3%.

It’s also worth noting that Christie’s 16% shouldn’t be compared with a baseline of 0% inflation. 

Consider a recent two-and-a-half-year period during which inflation was at or below 2% — January 2017 to June 2019. During that period of nearly ideal inflation, prices still rose by almost 5% cumulatively.

The bottom line: Biden and Christie are taking the same data and using it to make opposite, yet credible, arguments. As always where political rhetoric is concerned, listener beware.