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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?

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  • 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, 2022 at 11:52
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    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, 2022 at 23:36
  • Related: My answer to "Can inflation occur in a positive-sum game currency system such as the Stack Exchange reputation system?" at SE.Economics. That answer explains inflation and provides a general equation for it.
    – Nat
    Aug 15, 2022 at 4:50

2 Answers 2

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73

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

Here is the Consumer Price Index for July 2022

Inflation 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.

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  • 15
    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, 2022 at 4:17
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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, 2022 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.
    – user11643
    Aug 14, 2022 at 15:28
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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, 2022 at 2:25
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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, 2022 at 15:07
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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.

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  • Comments are not for extended discussion; this conversation has been moved to chat.
    – Oddthinking ♦
    Aug 16, 2022 at 1:34

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