The form of inflation that causes the most day-to-day discomfort is grocery inflation. White House economists have released a new analysis suggesting that the discomfort is finally improving.

Why it matters: Everybody has to eat, so when food becomes more expensive, it is particularly vivid and painful. But the data shows that grocery inflation has come off its high boil — with some commonly consumed items actually becoming cheaper — and that wage growth is catching up.

The big picture: Grocery prices have risen rapidly over the last three years, but most of that rise happened in 2021 and 2022, not more recently.

• Overall "food at home" prices rose only 1% over the 12 months ended in May, but that 1% rise occurred on top of the earlier price run-up, fueling discontent with inflation that has been a major driver of overall negative views on the economy.
• But some grocery prices have fallen outright over the last year, including for apples (down 13.2%), potatoes (down 3.2%), ham (down 5.4%), cheese (down 3.4%) and milk (down 2.1%).

Driving the news: In a new blog post seen first by Axios, the White House Council of Economic Advisers notes this progress and takes it a step further, finding that relative to average wages, groceries are now as affordable as they were in 2019.

• By the CEA's calculations, it takes 3.6 hours of pay for the average non-supervisory worker to afford a typical basket of groceries, down from nearly 3.8 at the start of 2023.
• The economists find "that grocery inflation is, in fact, way down from its recent peak, some grocery prices have fallen, and because wage growth has been strong, grocery purchasing power is up."
• They note that major grocers like Aldi, Target and Walmart have announced price cuts "which may not have shown up yet in the data."

Yes, but: The change in average wages is just that, and masks a wide range of different experiences consumers face in terms of their earnings. Not everybody has experienced the kinds of pay raises reported in average data, but pretty much everybody must pay more than they did four years ago for food.

• Moreover, the psychology of inflation is such that it is unclear how much weight people put on how their grocery bill compares to their wages.
• To economists, higher worker pay and higher consumer prices are two sides of the same inflationary coin, but many people view pay increases as something they earned through hard work, while higher grocery prices are an unfair burden placed upon them.

The world's major central banks can largely be divided into two groups. Some, like the European Central Bank and Bank of Canada, are cutting interest rates — confident that inflation will fall to its 2% target. Others, like the Fed, are more cautious and keeping rates on hold.

Driving the news: The Bank of England joined the latter group this morning, at least for now.

• It held its main interest rate at 5.25% — the highest in 16 years, even as inflation officially returned to its 2% target in May. Officials want further signs that downshift is sustainable.

What they're saying: "Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably," the Bank of England said in a statement.

• "Key indicators of inflation persistence have continued to moderate, although they remain elevated."
• For instance, inflation in the services sector, which is influenced by tight labor markets and wage pressures, came in hotter than anticipated for May. Officials fear that might cause inflation to rebound.

The intrigue: The policy decision comes weeks before the U.K. holds a general election in which inflation and cost of living are key issues for voters.

• Bank of England officials noted that the timing of the election "was not relevant to its decision at this meeting."

What to watch: The decision to keep rates steady was "finely balanced" among officials, a hint that a rate cut could come later this summer.

🇳🇴🇨🇭 In other central bank news: Norway's central bank also kept interest rates on hold today; the Swiss National Bank cut rates for the second time this year.