Inflation has returned to normal. What does that mean for the election?
As the U.S. hurtles toward a presidential election this fall, the nation’s inflation rate has quietly returned to normal, even as it continues to worry voters and draw focus at campaign events.
More than half of adults list inflation as a top issue for the country, making it the highest-ranking concern by a wide margin over the likes of immigration, crime and abortion, according to an Ipsos poll conducted late last month.
The disconnect stems in part from a typical lag between when inflation comes down and when consumers acclimate to new price levels, since a lower inflation rate does not mean prices have come down but rather that they have begun to increase at a slower pace, experts told ABC News.
While consumer attitudes have brightened in recent months, many people remain frustrated with the cumulative leap in prices over recent years. The trend carries uncertain implications for the contest between Vice President Kamala Harris and former President Donald Trump, since persistent concern about inflation could hurt Harris but recent improvement in sentiment may blunt some of the negative impact.
“Inflation is really something that takes people a long time to feel better about,” Chris Jackson, senior vice president of public affairs for Ipsos in the U.S., told ABC News.
“It’s certainly better for Harris to have inflation coming down than going up, but it’d be better for her if it came down six months earlier,” Jackson added. “Right now, it’s very much a toss-up.”
Inflation has slowed dramatically from a peak of about 9% in 2022, hovering right near the Federal Reserve’s target rate of 2%.
Some household staples have shown major progress. Gas prices have declined sharply in recent months. While food prices are rising at a slower pace than the overall inflation rate, the U.S. Bureau of Labor Statistics data shows. By contrast, housing prices continue to climb at a rate more than double overall price increases, the data found.
While overall inflation has returned to normal, the progress cannot undo a leap in prices that dates back to the pandemic. Since the outset of 2021, consumer prices have skyrocketed more than 20%.
That accumulated rise in prices helps explain why people think inflation remains high, even if it has fallen to a level widely viewed by economists as normal, said Sofia Baig, an economist at the polling firm Morning Consult.
“There's a mismatch of where people think inflation is and where economists think inflation is,” Baig said. “Many people seem not to see inflation has come down because prices are so much higher.”
Eventually consumers get used to elevated price levels in the aftermath of high price increases, but the process takes up to three years starting at peak inflation, Neale Mahoney, a professor of economics at Stanford University and a former special adviser for economic policy to the White House National Economic Council under Biden, told ABC News. Roughly two years and four months have passed since inflation reached its peak in June 2022.
“We’re getting to the point where inflation concerns are starting to recede,” Neale said.
Attitudes about the economy have improved since 2022, data shows. Consumer sentiment ticked upward in August, the most recent month on record, but attitudes remain well below pre-pandemic levels, a University of Michigan survey found.
Partisanship also plays a significant role in how individuals perceive inflation, making dissatisfaction more persistent among conservatives than liberals, experts said.
Roughly 80% of adults who consume conservative media said they had not seen costs for groceries or gasoline go down, while 17% had seen a decrease, the Ipsos survey in September showed. For adults who consume mainstream media, 46% said they had not seen prices for those items fall, while 47% said they had seen such a decline, the poll found.
“It’s hard to separate people’s feelings about the economy from their feelings about politics,” said Jackson.
Still, the prevalence of stubborn perceptions of inflation could hurt Harris, though the uptick in consumer sentiment could limit the damage, some experts said.
“I don’t think things will change in time for the election,” said Baig, but she noted the improvement in attitudes among consumers. “I think that’s a good thing if you're the incumbent party but it’s still not where it used to be.”
The exact trajectory for prices and the economy remains uncertain, experts said, leaving open the question of how it will factor into the election.
“In four weeks, we’ll find out,” Jackson said.
