May 26, 2024 - Economy

"Inflation" doesn't mean what it used to

The line chart shows the change in the Consumer Price Index from January 2021 to April 2024, as measured both cumulatively since Biden's inauguration and year-over-year. There's a steady increase in cumulative inflation over this period that ends 19% higher than January 2021. Year-over-year change rises sharply and starts to fall in July 2021 before ending at 3.4% in April 2024.
Data: BLS; Chart: Axios Visuals

The meaning of the word "inflation" has changed. It used to mean rising prices; now it means high prices.

Why it matters: Pedants, economists, and style-guide editors might not like it, but if you want to understand what people mean when they complain about inflation, you need to understand how the vernacular has evolved over the past couple of years.

The big picture: Inflation, at least as officially measured by the Bureau of Labor Statistics, has come down sharply from its peak of 9% in mid-2022. It now stands at 3.4%, broadly in line with where it was for the quarter-century between 1983 and 2008.

The other side: The headline measure of inflation is based on something pretty arbitrary — where prices were exactly one year ago.

  • The more salient timeframe, especially in an election year, might be what has happened to prices since the pandemic, or since Joe Biden took office.

Zoom out: A more intuitive concept of inflation is just "am I paying higher prices for things than I used to."

  • Under that definition, inflation can be high even when prices are falling.
  • On a literal level, that should not be possible — prices that are deflating can't also be inflating. In quotidian usage, however, it's entirely possible for $4 eggs or gasoline to be indicia of inflation, even if they were $4.50 previously.

Between the lines: A nerdy lexicographical schism — the descriptivists versus the prescriptivists — has become a key driver of the 2024 presidential election campaign.

  • Voters who think that inflation is high are likely to blame Biden for it, and less likely to vote for him.
  • When Biden administration staffers push back by saying that inflation isn't high, they risk being seen as out of touch.

Where it stands: These days, if you read or hear something about inflation in mainstream discourse, then:

  • Either "inflation" is being used to mean "high prices",
  • Or else there's an implicit or explicit "actually" in there somewhere, and you're getting the feeling that you're being mansplained to.

The bottom line: Prices are high, therefore inflation is high. Get used to it.

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