Cost-of-living concerns threaten Democratic gains in run-up to midterms

After almost a year living in the Washington area, one of the things that continues to surprise is the price of food and groceries.

The United States, like many other places across the world, has been experiencing high inflation.

Last week, official figures showed the consumer price index had increased by 8.3 per cent over the previous 12 months.

The White House had been highlighting a long fall in the price of petrol, which has now been falling for close to 100 days.

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However, the inflation report overall, when it was released, was higher than had been expected by the markets. It led to a significant fall in stock prices as investors feared it would lead to the Federal Reserve continuing to increase interest rates.

The Dow tumbled 1,276 points or 3.9 per cent while the Nasdaq shed 5.2 per cent.

Some economists had been hopeful that the fall in the price of petrol over the summer would cool the inflation problem. However, the figures showed that inflation continued to be driven by the rising cost of food and housing, core elements in the domestic budgets of almost everyone.

Food prices in the US increased 0.8 per cent between July to August. Flour was up 2.2 per cent, potato prices rose 2.5 per cent, while butter was 1.9 per cent more expensive.

From a personal perspective it is not that prices seemed to spike dramatically over the last 12 months. From the start the cost of many basic goods and foodstuffs appeared more expensive than in Ireland.

The fall over recent months in the value of the euro to effective parity with the dollar makes comparisons easier.

Meat is expensive. In a local chain supermarket last weekend the price of a pack of three striploin steaks was $46, although for those with a loyalty card it was about 50 per cent cheaper. Lamb chops were nearly $14 per pound. Two pieces of pre-packaged salmon cost $12.

Along the section of the aisle where eggs were on sale, a notice advised customers that prices were higher than normal. Free-range eggs cost about $6 per half dozen.

Of course, those examples are just a snapshot. Cost-of-living comparisons are much more complex.

The average salary in Washington DC is just under $80,000 per year. Taxation, both at federal and local level, is much lower than in Ireland. There could be an effective rate of less than 20 per cent.

However, on top of this most people face the extremely high cost of health insurance unless it is paid for by an employer. And with most insurance packages there remain deductibles and co-payments which have to be paid by the insured person.

Last week the president argued that it would “take more time and resolve” to bring down inflation.

He maintained that petrol prices were down an average of $1.30 a gallon since the beginning of the summer while some price increases had slowed from the month before at the supermarket. He also pointed to a rise in “real wages” for a second month in a row, and said this would give “hard-working families a little breathing room”.

Mr Biden contended that his recently-passed inflation reduction legislation to cut costs of healthcare and energy would ease the problems.

However, the Republican Party leadership is determined to try move the political focus away from abortion and back to literally bread-and-butter issues.

Its chairwoman, Ronna McDaniel, said the party needed to stress to voters that they were “paying more for eggs, for milk, for rent, for insurance, for car insurance”.

“It is death by a thousand cuts for a family who is getting hit at every single level, and their budget is taking a beating, and they’re wondering: ‘How am I going to make ends meet?’ It is not just gas any more: it is everything.”

Joe Biden’s Democratic Party has received a boost in the polls over the summer amid falling petrol prices and the passing of a number of legislative initiatives. However, there are still six weeks to go before the crucial midterm elections. If food prices continue to rise, the improving trends for the Democrats over recent months could easily stall, if not reverse.