The significant cooling of inflation in the United States, what does it mean for the presidential election?

As the United States enters this fall's presidential election, although inflation has gradually returned to normal, price issues still worry voters and have become a focal point of the campaign.

According to a survey by the French Paris-based research company Ipsos at the end of last month, more than half of American adults still consider inflation to be the country's top issue, far exceeding other concerns such as immigration, crime, and abortion. Experts say that this disconnect is partly due to the lag between the decline in inflation and consumers adapting to the new price levels, as lower inflation does not mean prices are falling, but rather indicates a slowdown in the rate of price increases.

Despite a recent improvement in consumer sentiment over the past few months, many Americans remain dissatisfied with the cumulative rise in prices in recent years. This trend has brought uncertain impacts on the competition between Vice President Harris and former President Trump, as persistent inflation concerns may not be favorable for Harris, but the recent improvement in sentiment may alleviate some of the negative effects.

Chris Jackson, Senior Vice President of Public Affairs at Ipsos in the United States, said in an interview: "Inflation is a problem that takes a long time to make people feel better. He added:

"For Harris, a decrease in inflation is definitely more favorable than an increase, but if it had come down six months ago, it would have been more favorable for her. The current situation is still very much up in the air."

As the presidential election enters the sprint stage, one of Trump's most effective attacks is to blame inflation on Harris. However, analysts believe that any Americans truly concerned about inflation should be more worried about Trump than Harris, as Harris is more serious about combating inflation and helping families cope with high living costs. More importantly, Trump plans to impose high tariffs on all imported goods, which will significantly raise prices and severely impact consumers, especially those who are less affluent.

Inflation in the United States has significantly slowed from a peak of about 9% in 2022 and is currently hovering slightly above the Federal Reserve's 2% target. Prices of some essential goods have shown significant improvements. Data shows that in recent months, gasoline prices have dropped significantly. The rate of increase in food prices is slower than overall inflation, but data from the U.S. Bureau of Labor Statistics shows that the rate of increase in housing prices is still more than twice the overall price increase.

CPI inflation data for September will be released on Thursday, October 10th at 8:30 pm, with the market expecting overall CPI inflation to continue to decrease to 2.3% year-on-year.

Although overall inflation has returned to normal, this progress does not reverse the price surge since the pandemic. Since the beginning of 2021, consumer prices have risen by more than 20% cumulatively. Economist Sofia Baig explains that this cumulative price increase explains why people still perceive inflation to be high, even though inflation has fallen to a level widely considered normal by economists. Baig said:

"There is a gap between people's perception of inflation and economists' views. Many people seem unaware that inflation has come down because prices are still high." Stanford University economics professor and former special advisor on economic policy to the White House National Economic Council Neale Mahoney said that after a period of high inflation, consumers will eventually get used to this higher price level, but this process may take up to three years. Counting from when inflation peaked in June 2022, it has been about two years and four months. "We are entering a phase where concerns about inflation are starting to fade," Mahoney said.

Data shows that public attitudes towards the economy have improved since 2022. A survey by the University of Michigan showed that consumer confidence rose in August, but attitudes are still far below pre-pandemic levels. Political affiliations also play an important role in individuals' perceptions of inflation, making conservative dissatisfaction with the economy more enduring. An Ipsos survey in September showed that about 80% of adults who frequently consume conservative media said they did not see food or gasoline prices drop, with only 17% saying prices had fallen. For adults who frequently consume mainstream media, 46% said they did not see prices drop, while 47% said prices did decrease.

Jackson said, "It's hard to separate people's feelings about the economy from their feelings about politics." Although stubborn perceptions of inflation may not be favorable for Harris, an increase in consumer confidence could reduce this negative impact, experts say. Berg said, "I don't think there will be much change before the election," but she noted that the improvement in consumer attitudes is good news for the ruling party, even though it has not yet returned to previous levels.

However, the exact trajectory of prices and the economy remains uncertain, leaving suspense as to how inflation will affect the election. Jackson said, "We will know the results in four weeks."