Biden's Old '0% Inflation' Comment Comes Back To Bite As McKinsey Says New Biggest Splurge For US Consumers Is Groceries

According to a recent CBS News poll, 39% of Americans believe the economy is "good," with 57% of respondents viewing the economy as "bad."

It's an issue President Joe Biden has to grapple with as his reelection campaign gears up, especially given that 65% of Americans remember the economy as good under former President Donald Trump, according to the poll.

In August 2022, Biden announced "zero inflation" at a time when the consumer price index (CPI) reported it was 8.5%. While he was referring to 0% month-over-month inflation at the time, it rubbed many the wrong way given the negative perception of the economy, with one Republican senator calling the claim "gaslighting."

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While Biden has slightly backed off those claims in the face of still rising inflation, citing "progress" while acknowledging "prices are still too high," a report from the consulting firm McKinsey & Co. uncovered what Americans are now splurging on.

It found that "groceries were the new biggest splurge category," beating out other more discretionary categories such as eating out, travel and beauty, with millennials being the most likely to count groceries as their biggest luxury.

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While the same report cited improving consumer optimism about the economy, some commentators found humor that groceries are the biggest splurge category in the face of persistent inflation.

Former American intelligence contractor Edward Snowden posted on X, "The ratchet: first they criticize you for eating avocado toast and then for eating at all."

As many Americans struggle to keep up with the rising prices of necessities, some funds see an opportunity to profit.

Alaska Permanent Fund, the largest U.S state wealth fund, recently disclosed it tripled its stake in Walmart Inc. WMT and Kroger Co. KR, America's two largest grocery players by market share.

Even Warren Buffett's Berkshire Hathaway Inc. BRK is a big fan of Kroger, owning 6.9% of the grocer.

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