Inflation has been constantly in the news over the past 2 years, but it has especially been in the news lately with regards to one country: Argentina. That country has been experiencing triple-digit annual inflation lately, and it has become one of the key issues in the current presidential race.

How bad is inflation in Argentina? Here’s a comparison to some other G20 countries from September 2019 through September 2023 (data from the OECD).

Cumulative consumer price inflation in Argentina over the past 4 years is over 800 percent. That means goods which cost 100 pesos in September 2019 now costs 900 pesos, on average. Well, they did in September. It’s almost November now, so if the recent inflation rates persisted, those goods are around 1,000 pesos now.

Turkey also stands out as a country with very rapid inflation the past 4 years — without Argentina on the chart, Turkey would clearly stand out from the rest. But other than Turkey, all the other countries are bunched at the bottom. Has there not been much difference among them? Not quite.

This next chart removes Argentina and Turkey:

In this second chart we see two standouts on the opposite end of the spectrum: Japan and Switzerland have had extremely low inflation, just 6 and 5 percent cumulatively since late 2019 (and this is not unusual for these two countries in recent history).

For us here in the USA, things don’t look so good. Only Brazil and the EU are higher (and the EU is mostly due to energy price inflation in Eastern Europe), so other than that we are basically tied with the UK for the worst inflation performance among very high income countries during the pandemic. That’s bad news! But perhaps one silver lining is that average wages in the US have outpaced inflation slightly: 23 percent vs 20 percent growth over this time period. That’s not much to celebrate — except relative to most of the rest of the world.

The latest CPI-U price data shows that the rate of inflation in the US has slowed significantly to just 3% in the past 12 months. That’s a huge improvement from the peak last June, when the annual rate of inflation was over 9%. Still, prices as a whole aren’t falling, and they clearly aren’t anywhere near where they were before the pandemic: using the CPI-U, prices are up over 17% since January 2020.

Lately I’ve heard many people asking a good question: will prices ever get back down to where they were? Usually they mean pre-pandemic prices, though sometimes they refer to a particular point-in-time (such as the start of Biden’s presidency). The only correct answer is “we don’t know,” but I think a likely answer for many goods and services is “no.” For many reasons, the nominal prices of most goods and services rise over time. Though this is not true for everything, of course (newer technologies are one example we often see).

But what about specific goods that we buy frequently? Will we ever see gasoline consistently below $3 per gallon again? Will we ever see milk consistently below $4 per gallon again? What about eggs and bread? And indeed, these prices are well above January 2020 levels: 23% higher for milk, 43% for bread, 45% for gasoline, and a whopping 52% for eggs. For the price data, I am using this convenient data on common food and energy goods from BLS.

For some of these items, I do think you might someday see prices fall back to levels consumers were used to from the recent past, since food and energy prices tend to be volatile. For others, though maybe not. But I think we as consumers can become overly focused on staples that we buy frequently and can easily recall the price in our heads. For example, while eggs, bread, and milk are items that we buy frequently (including being the staples of stocking up before a storm), in total these constitute just 0.6% of average consumer spending.

If instead of those 3 staples, your mind naturally anchors on produce prices, the trends look different: oranges are up 23%, but bananas are only up 10%, and tomatoes are, in fact, down 14% since January 2020. But again, these items are less than 0.5% of total consumer spending. Ideally, we shouldn’t anchor on any one subset of goods when doing a good analysis, even if it is natural for us to do so in our lives as consumers.

This is where the benefit of a price index, like the CPI-U, comes in.

Back in December I pointed out that, thanks to slowing inflation, real wages had been rising since June 2022 (using either the CPI or the PCEPI for inflation adjustments).

With the latest monthly data, we can now report more good news for wage earners: CPI-adjusted wages have increased over the past 12 months. That had happened since 2021. In the past 12 months, wages of production and non-supervisory workers are up 5.1%, just a hair more than the annual increase in the CPI of 5.0%. It’s not much, and we’re not back to our pre-pandemic norm of 2% real wage growth. But it is more good news that we may finally getting past our post-COVID inflationary hangover.

Back in May 2022, I wrote about the very bad picture for inflation-adjusted wages in the US. While they were still slightly above pre-pandemic levels, wages had been falling consistently since the beginning of 2021.

But since then, we’ve got some better news. The chart below shows the data (note: I’m using wages for private production and non-supervisory workers here, rather than for all private workers in the May post).

While the overall inflation picture still looks bad, with 7.1% annual inflation in the latest report, we also see that in the past 5 months wage growth has exceeded CPI growth. It’s also been true compared with the PCE price index for the past 4 available months (November PCE data won’t be available until next Friday). Inflation has cooled slightly in the past few months, while wages have continued to grow.

This all means that real (inflation-adjusted) average wages in the US have been rising consistently since June 2022. Finally, some good news!