Was inflation in the US 0% for July 2022?

Question

A few days ago, President Biden said

Today, we received news that our economy had 0% inflation in the month of July — 0%

This was contested in conservative media, with Fox News running the headline "White House blasted for claiming ‘zero’ inflation after latest CPI report: ‘Lying to everyone’". They claimed it's not inflation that's 0%, but change in inflation that's 0%

That means inflation "slowed in July for the first time in months," as the outlet reported, though it’s only .2% less than the highest CPI (8.7%) in 40 years. Essentially inflation remains almost as bad as it’s been all summer. And it’s not "zero."

Perhaps Biden meant "zero" as in "zero increase" in inflation.

However various other news sites claim that the month-over-month inflation really was 0%.

So which is it?

I think part of the problem is that inflation itself is *change*: the rate of change in prices. So the price of gas was not zero in July, but it didn't change in the period so inflation was zero **in that period**. — Miguel, Aug 14 '22 at 11:52
From the quote in the OP, Fox is giving a charitable interpretation *to Biden* of "zero", not claiming it itself. Your summary does not match what is quoted. — qwr, Aug 14 '22 at 23:36
Related: [My answer](https://economics.stackexchange.com/a/27808/12618) to ["Can inflation occur in a positive-sum game currency system such as the Stack Exchange reputation system?"](https://economics.stackexchange.com/q/27796/12618) at SE.Economics. That answer explains inflation and provides a general equation for it. — Nat, Aug 15 '22 at 04:50

BlueRaja - Danny Pflughoeft · Accepted Answer · 2022-08-15T05:53:40.400

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After a bit more research, I'd rate this true but misleading.

Here is the Consumer Price Index for July 2022

As highlighted in the screenshot, the month-over-month inflation for July 2022 was indeed 0%. This means that the weighted-average of prices measured by the CPI was exactly the same in June 2022 and July 2022.

However, "inflation" is usually given as a 12-month change of price-averages, not a 1-month change. Since the 1-month inflation was positive for 11 out of the past 12 months, it should be no surprise that the 12-month inflation is also positive, at 8.5%.

In other words, while month-over-month inflation was indeed 0% for July, what would normally be called "the inflation as of July" was not.

The claim by Fox news that 0% refers to the change in inflation is straight up false. Both the month-over-month and year-over-year inflation values went down, meaning the change in inflation is negative in both cases.

Presumably Fox is confused because the above chart says "adjusted changes from preceding month". However this refers to the change in the CPI, which is what defines inflation, not to the change in inflation itself.

As an aside, they've now made this claim in two articles, neither of which mentions the month-over-month vs. year-over-year distinction, despite the second being a critique of a NYT article which explains the distinction. That makes it hard to pass this off as an innocent mistake.

edited Aug 15 '22 at 05:53

answered Aug 13 '22 at 18:03

BlueRaja - Danny Pflughoeft

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In the Netherlands this is a common way to indicate inflation for that month. I don’t know if it’s weird for the US, but it definitely wouldn’t raise any brows in the Netherlands. Although I will say that the news does make it obvious it’s just compared to that month the year before. – Sebastiaan van den Broek Aug 14 '22 at 04:17
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Where does the second article say "that 0% refers to the change in inflation"? Did you just make that up? Because it sure seems like you did. – user76284 Aug 14 '22 at 10:36
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I don't agree it was misleading, if any, it was incomplete failing to mention the computed period. In Spain it is also usual to specify *interanual* inflation, if this is meant, so this is not what would normally be called "the inflation as of July", at least not globally. – Miguel Aug 14 '22 at 11:58
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I don't understand how Fox saying "Perhaps Biden meant "zero" as in "zero increase" in inflation" is somehow dishonest, rather than a charitable interpretation. One that's true and more conventional in scope than Biden's cherry pick. – Aug 14 '22 at 15:28
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If you are saying the statement is misleading that would also suggest that all statements about inflation are misleading as they are using the same calculations. Sure you can say that for some periods it is going up because all numbers are positive but that doesn't give an accurate indication of how much. – Joe W Aug 14 '22 at 15:42
@user76284 _"That the columnist called that dip [aka 'change'] in the inflation rate a "month without inflation," mirrors President Biden’s Wednesday claim that the July numbers indicate "zero" inflation"_ – BlueRaja - Danny Pflughoeft Aug 14 '22 at 16:19
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That's the third time I've notice you've been fast and loose with quotes and paraphrase. I recommend just quoting to support your statements. – Aug 14 '22 at 16:42
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@fredsbend As explained in the answer, Fox's "charitable interpretation" is neither true nor more conventional. I never used the word "dishonesty", but I don't think it's unreasonable given they clearly _(at least by the time of the second article)_ knew the correct interpretation, but never even mentioned it. – BlueRaja - Danny Pflughoeft Aug 14 '22 at 17:06
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I don't think that the statement is misleading at all. On the contrary, it is the common way of stating inflation that is counterintuitive and arguably misleading, since "inflation was x% in 2022" almost always means that a price index rose by x% over the course of the year, whereas news outlets can say things like "inflation was 10% in July" *every month*, accidentally giving the impression that prices are going up much more quickly than was otherwise the case. It also gives the impression that inflation is getting worse for months after it stops getting worse. – Obie 2.0 Aug 15 '22 at 02:25
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"That makes it hard to pass this off as an innocent mistake." If you're going to accuse the President of the United States of lying, you should engage in basic fact-checking. Not doing so is journalistic incompetence, and cannot be passed off as an "innocent mistake" even if you honestly thought what you were saying was true. – Acccumulation Aug 15 '22 at 05:35
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+1 for the Fox interpretation being a generous interpretation of what Biden meant to say and not misleading. If the inflation rate is usually described in terms of YoY (which it is by convention by economists), then having a MoM inflation increase of 0% could accurately be described as "no change in the inflation rate (of this month compared to last month"). Such a claim is neither false nor misleading. They could have alternately simply blasted Biden for lying (which he did in implying 0% MoM is the same as 0% YoY in his original claim), but they didn't. – Ertai87 Aug 15 '22 at 14:09
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@SebastiaanvandenBroek The reason why (my guess, I'm not an economist) inflation is YoY rather than MoM by convention is because certain commodities have cycles. For example, gas (in North America) tends to be more expensive in the summer months than the winter months (no, I don't know why). If one were to calculate inflation MoM then inflation in the winter would always be lower (as we can see in the current situation, gas prices cascade into other products), and inflation in the summer would always be higher, and that would look and sound weird and alarming. – Ertai87 Aug 15 '22 at 14:14
@user76284 _"I suggest you stop lying and amend your answer"_ - I agree that the answer can be improved by removing the last paragraph "As an aside...", because the Fox article quoted in that paragraph actually does make the distinction between month-on-month and year-on-year inflation, and does not repeat the claim that Biden meant the change in inflation. But the level of your outrage is completely misplaced given the shear amount of lies stacked up in the first Fox article. – fishinear Aug 15 '22 at 15:00
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I don't think it was misleading. No one could sensibly think that in July we'd reversed all the inflation over the past year. I thought it was obvious that they meant monthly inflation. – Barmar Aug 15 '22 at 15:07
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@Ertai87 _"having a MoM inflation increase of 0% could accurately be described as "no change in the inflation rate" "_ - not really, no. The YoY index for June was 9.1%, so the change in the YoY inflation between June and July was actually a decrease of 0.6 percent-point. The Fox suggestion that "maybe he meant a change in inflation" is likely just a wild guess without any incentive to do real fact-checking. – fishinear Aug 15 '22 at 15:22
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@SebastiaanvandenBroek That's _not_ what Biden claimed. Comparison vs. the same month in the previous year is relatively common in the U.S. as well, but that figure is _definitely not_ 0%. It is instead 8.5%, which is near the highest value recorded in the last 40 years. Biden was literally just comparing to last month. – reirab Aug 15 '22 at 16:16
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"month-over-month inflation was indeed 0% for July" No, it wasn't. Everything except hydrocarbon fuels continued to inflate at almost exactly the same month-over-month rate as each of the preceding months. That's NOT zero inflation, even month-over-month. The hydrocarbon fuels had a bit of reversion-to-mean following a huge rise the previous month, but it would be inaccurate to represent that as a fall in fuel prices which led to a weighted average of zero. The honest representation of fuel prices would be "high volatility" (and then month-over-month change is just meaningless). – Ben Voigt Aug 15 '22 at 17:08
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@fishinear Check the chart quoted in this answer. The MoM change of the CPI (which is generally considered the most scientific measure of inflation, which is why it's used as the primary one) according to that chart is 0.0%. – Ertai87 Aug 15 '22 at 17:31
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@BenVoigt - Food away from home also decreased from June to July. The monthly inflation rate for all items except food and energy was also 0.3%, lower than all the previous months except one, and was thus half the inflation rate in the previous three months. No, I do not think it is accurate to say that all prices except hydrocarbons increased at nearly the same rate as in previous months. – Obie 2.0 Aug 16 '22 at 04:39
@reirab you’re right, that is something different and somewhat misleading. I thought Biden referred to the same month the year before. – Sebastiaan van den Broek Aug 16 '22 at 05:05
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@Obie2.0 : not misleading? In a country where inflation has been higher than it ever was in living memory, where more and more people are concerned about inflation, and approval ratings are plummeting, isn't the purpose of a big proud statement of inflation finally having reached zero. Zero! Yes, ZERO!, to make people think "aha, so the inflation problem has finally been solved"? So isn't it misleading to cherry-pick a very short time period so that people will think that the overall economic problems have been solved? – vsz Aug 16 '22 at 06:12
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@vsz - First of all, some folks were alive back in the early 1980s when yearly inflation rates were higher. So hold your horses on that "living memory," young'n! Second, there's nothing misleading to people who understand basic economics and mathematics and understand that the inflation rate is somewhat volatile from month to month. The inflation rate could also go down to zero for the next year and then go up after that. If people think that inflation being at zero for a month means that it must stay that way, that is their mistake. – Obie 2.0 Aug 16 '22 at 06:28
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@Obie2.0 : ah, so did Biden hold a big speech every single month, proudly announcing the current inflation? Oh no, he didn't. He has chosen the very specific moment it was momentarily zero, to make a public announcement. You know, on this site we have some words for when Trump makes a statement which is *technically true* but is cherry-picked in a way to lead the average citizen to a wrong conclusion given the big picture. – vsz Aug 16 '22 at 07:04
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@Obie2.0 The reason it's misleading is because for over a year now, we've been hearing about inflation rates, and they have invariably been *annual* rates. Officially inflation's running above 9%. (In reality, gas, groceries, and rent -- the 3 biggest line items on John Q. Citizen's budget -- are all up significantly more than that!) And now Biden comes out and says that as of last month, inflation is 0%. – Mason Wheeler Aug 16 '22 at 16:03
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When what we've been hearing about is all annual rates, to suddenly present it as a *monthly* rate is deceptive in the extreme, carefully insinuating without actually saying so that prices have suddenly gone back to normal. It's as dishonest as if someone were to say that the price of gasoline is now $1.22 while conveniently neglecting to mention that that's measured in liters rather than gallons. – Mason Wheeler Aug 16 '22 at 16:05
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@Ertai87 _"The MoM change of the CPI according to that chart is 0.0%"_ - I understand that. I was referring to the statement that that 0% _"could accurately be described as "no change in the inflation rate" "_ - It cannot. The **change** in the **YoY** inflation rate was a decrease of 0.6 percent points. The **change** in **MoM** inflation rate was a decrease of 1.3 percent points. – fishinear Aug 16 '22 at 17:23
@fishinear Ah, when I read the article I see where it says that. But now I'm confused; how can they say the change from the previous month was 0.0 but it was actually a decrease of 0.6? I'm missing some information there; it can't be both a change of 0.0 and also a decrease of 0.6. – Ertai87 Aug 16 '22 at 17:53
@Ertai87 The CPI is a weighted-average of various prices. Inflation is defined as the change in the CPI. The month-over-month (MoM) inflation was 0% in July, meaning the CPI did not change. The "change in MoM inflation" is negative, since the MoM inflation went down (from 1.3% to 0%). If you're familiar with Calculus terms, inflation is the derivative of CPI, while "change in inflation" is the second derivative of CPI. – BlueRaja - Danny Pflughoeft Aug 16 '22 at 18:50
@BlueRaja-DannyPflughoeft I got that. Where does the 0.6% figure come from, or, for that matter, the 9.1% figure? – Ertai87 Aug 16 '22 at 19:12
@Ertai87 For the Year-on-Year change, the CPI in July 2022 is compared with the CPI in **July** 2021. That is the 8.5% inflation rate mentioned in the answer. For the year-on-year rate for **June** 2022, the CPI in June 2022 is compared with CPI of **June** 2021, not July. The figure is not mentioned in the answer, but the CPI in June 2022 was 9.1% higher than in June 2021, hence a YoY inflation rate of 9.1% for June. – fishinear Aug 16 '22 at 19:18
@fishinear So the inflation rate change (based on CPI cost) from June 2021-2022 is 9.1%, from July 2021-2022 is 8.5%, and from June 2022-July 2022 is 0%, with the difference between the first 2 numbers owing (presumably) to the fact that the inflation from June 2021-July 2021 was some positive number which would equate to 0.6% of the 2022 numbers? Do I have it right? – Ertai87 Aug 16 '22 at 19:25
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@Ertai87 _"So the inflation rate change from June 2021-2022 is 9.1%"_ - Fully correct. Except that it is called "inflation rate", or "CPI change", not "inflation rate change". – fishinear Aug 16 '22 at 19:28
@fishinear Sorry, I did an "ATM Machine". You're right. – Ertai87 Aug 16 '22 at 19:30

score -1 · Answer 2 · edited Aug 16 '22 at 06:00

Fox either has no understanding of what "inflation" means, or they're deliberately lying.

The CPI did not increase in July 2022: https://www.bls.gov/opub/ted/2022/consumer-price-index-unchanged-over-the-month-up-8-5-percent-over-the-year-in-july-2022.htm

Though, Fox Business reported on the latest Consumer Price Index number, which "rose 8.5% in July from a year ago, below the 9.1% year-over-year surge recorded in June." The rate was less than the CPI number in June [emphasis added]

This makes it sound like they are referring to the CPI as a "rate". The word "rate" refers to how fast something is changing. CPI is not a rate. It's the cost of a basket of goods. Inflation is a rate. It's the rate at which the CPI is changing.

Their confusion, or just plain lying, about inflation is made even more clear when they say:

Perhaps Biden meant "zero" as in "zero increase" in inflation.

No, he meant "zero" as in "zero increase in CPI". Inflation is increase in CPI, so zero increase in CPI is zero inflation.

So: Biden's statement was factually correct, albeit arguably cherry-picking. Fox's criticism of it was just plain false.

Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/138549/discussion-on-answer-by-acccumulation-was-inflation-in-the-us-0-for-july-2022). — Oddthinking, Aug 16 '22 at 01:34

Was inflation in the US 0% for July 2022?

2 Answers2