Inflation drops to 3% and Biden hopes to turn a weakness with voters into a strength

WASHINGTON (AP) — The politics of inflation took a sharp turn Wednesday with a report showing consumer prices rose at the slowest pace since the early months of Joe Biden's presidency.

Republicans have hammered Biden over the cost of groceries, gasoline, utilities and more, saying his $1.9 trillion pandemic relief package and push for electric vehicles were responsible for pushing inflation to a four-decade high.

The GOP argument has resonated with voters, but the report on consumer prices for June suggests that inflation has eased dramatically without any of the job losses that some economists and Republican leaders said would occur.

Prices have risen just 3 per cent from a year ago, compared with 9.1 per cent in June 2022, and it's the lowest reading since March 2021.

Unlike a year ago, inflation is mainly coming from a government measure of shelter based on what it would cost to rent a home.

This makes the inflation argument somewhat nuanced as data from AP VoteCast, a sweeping survey of the national electorate, shows that the majority of voters last year — 83 per cent of Republicans and 73 per cent of Democrats — own their homes and are largely insulated from higher rental prices.

Biden's team was quick to seize on the inflation report as proof that its policies are delivering results. Defying expectations that Federal Reserve efforts to combat inflation would cause layoffs, the unemployment rate is healthy at 3.6 per cent.

"Inflation is down by two-thirds over the past year," said Jared Bernstein, chair of the White House Council of Economic Advisers. "It is particularly notable and highly consistent with Bidenomics to see this steep a decline in the rate of inflation while employment remains so uniquely strong."

The president was quick to take credit, with the White House issuing a statement from him: "Good jobs and lower costs: That's Bidenomics in action."

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