On August 10, the Department of Labor's Bureau of Labor Statistics (BLS) released the July CPI that measures the change in inflation in the United States. There was no change in average prices. As a result, annual inflation is sat at 8.5%. During the previous month, the index reached 9.1%, marking the highest rate since the early 1980s.

The main factor explaining the decline in inflation is the drop in energy prices. According to the BLS, “the energy index fell 4.6% in July, after rising 7.5% in June. The gasoline index decreased 7.7% in the month after an 11.2% increase in June. The natural gas index fell in July after sharp rises, falling 3.6%. However, the electricity index rose in July rising 1.6%, its third consecutive monthly increase of at least 1.3%. The energy index rose 32.9% in the last 12 months. The gasoline index increased 44.0%, and the fuel oil index increased 75.6%. The electricity index rose 15.2%, the biggest increase in 12 months since the period ended in February 2006. The gas index has increased 30.5% in the last 12 months.”

However, other very sensitive prices for the wage worker class continued to rise, particularly food and housing. The food index increased 1.1% in July. Food at home rose 1.3% as all six major supermarket food group indices rose. Food away from home rose 0.7% in July. The index that measures housing expenditures, on the other hand, showed an increase of 0.5% in the month, according to the BLS. Food and housing are part of the central core of the price index. Specifically, the cost of housing, such as mortgage or rent payments, is often the most significant monthly expense for a family. Housing represents about a third of the CPI.

The improvement in the inflation indicator brought relief to the financial market, which was concerned that the interest rate hikes have not yet been reflected in the labor market, given that the demand for employees remains strong. In June, the Federal Reserve (FED) initiated the biggest hike in interest rates since 1980. In the face of this decrease in the CPI, according to CNN, “expectations that the FED will once again raise its benchmark interest rate by 75 basis points at its next monetary policy meeting have dropped since inflation data from Wednesday were released. More analysts now expect the central bank to raise rates by just 50 basis points.”

The increase in inflation has weighed significantly on wage earners' income. On average, wages rose 5.7% at the annualized rate in July, against inflation of 8.5%. In June, the situation was worse. Since poverty is mainly concentrated in populations of Latino origin and African-American people, the worst effects of rising prices fall more sharply on these segments.

To exemplify the plight of the working class, it is worth citing the difficulty of Penelope Valdespino. She switched from her retail job to a better-paying position in the San Antonio, Texas, school district. The constantly rising prices quickly devour her higher salary. In an interview with NPR, she stated “I finally moved to a different job where yes, I will get $3 or $4 more an hour. That's amazing, but catching up and keeping everything in order is still a challenge in this climate right now. We're being cautious with the amount of meat we buy." According to NPR, "Valdespino welcomes the drop in gas prices but says she's still careful to limit unnecessary car trips. And she's looking after her pennies in the supermarket, where prices increased 13.1% over the previous year.”

A national survey organized by NPR, the Robert Wood Johnson Foundation, and the Harvard TH Chan School of Public Health showed that the greatest fears of Native, Latino, and African American populations arising from rising prices are the awe of being evicted from their homes, difficulties in purchasing food and lack of adequate medical care.

The survey includes data from the US's five largest racial and ethnic groups. More than 4,100 adults were surveyed between mid-May and mid-June 2022. According to NPR, “The data underscores racial and ethnic minorities' struggles compared to their white peers in some key spheres. of American life, particularly with finances, affordable housing, food, neighborhood safety, education, and health care.” Below we will highlight the major problems detected by the research.

According to the research, it is necessary to consider that the populations that presented the worst indicators are those that historically have already shown the disparity in the average conditions of American citizens. However, the sum of the effects of the Covid-19 pandemic and rising inflation exacerbated vulnerability. According to Robert J. Blendon, co-director of the research. and professor emeritus at the Harvard T.H. Chan School, "We've been looking at disparities for many years, but the acute needs caught us a little off guard unable to feed their families.”

Specifically, when it comes to financial problems, the survey found that 55% of blacks and 48% of Latino adults say they are experiencing severe financial difficulties. For white adults, the rate is 38%.

Financial problems often mean people have trouble keeping up with their credit card or loan bills or face other serious problems. In this regard, more than 40% of Black and Native American adults and 36% of Latinos fit this situation.

Most black and Latino families say they don't have emergency savings to cover at least one month's expenses. White adults are also more likely to receive significant financial support from older relatives — often help unavailable to racial and ethnic minorities. In this regard, only 14% of black adults and 16% of Latino adults say they have received gifts or loans worth $10,000 or more from parents or older relatives. This leads us to think about the absence of family protection networks, as other family members may face a similar situation. In the case of newly arrived immigrants, they have few people to support them.

As we have said, housing expenses absorb almost half of the income of the poorest families. According to the study, across all groups, more than 60% of adults say the lack of affordable housing available for purchase is a severe problem in their neighborhoods. The numbers aren't that different for affordable rental homes. But when it comes specifically to evictions, the burden falls heavily on black renters: 16% say they were evicted or threatened with eviction, while 9% of white renters surveyed reported similar experiences.

As we have said, high food price inflation is among the biggest concerns of Americans. However, the problem affects each ethnic group differently. About a third of black and Latino adults say they are having serious issues buying food, compared with 21% of white adults. It's higher for Native Americans: nearly 40% struggle to put food on the table.

Generally, the survey did not find the same disparities between Asians and white adults as between blacks, Latinos, and Native Americans. However, when only low-income Asians were included – people earning less than $50,000 a year – 46% said they were experiencing severe financial problems. Specifically, nearly a third of this subpopulation had serious problems paying their rent or mortgage, and 28% had severe problems buying food. About half say the lack of good jobs is a serious problem in their community.

When Americans think about their communities, the issue of security stands out. Neighborhood crime is a concern across all racial and ethnic groups but is particularly pronounced in minority communities. It's important to note that more than a third of black, Latino, and Native American adults say crime is a severe problem in their neighborhoods. It is essential to consider that the poorest communities have issues related to unemployment, underemployment, teenage pregnancy, poorly equipped schools, few spaces for culture and sports, and an infrastructure deficit. Added to this is the consumption of narcotics and gang violence.

Despite financial problems, research suggests that many families still have aspirations for their children's future. The overwhelming majority of families with children under 18 believe their children will graduate from college. It's more than 80% for each group surveyed.

However, some differences emerge from the data on how parents view their children's K-12 schools (elementary and high school in Brazil). About a third of black parents of school-age children rate the quality of education in their schools as just fair or poor. This compares to 24% for whites and 22% for Latino families. According to Robert Blendon: “There is a lot of research and studies that show that because of COVID, schools have closed and children of all races are really behind educationally. Our finding shows that substantially more black parents are saying that their children's schools are not doing a good job as children have come back."

The fact that there is no public health system in the United States is a lack that afflicts broad social segments. This was evident with the highest percentage of Covid-19 deaths among minority groups. Research by NPR, the Robert Wood Johnson Foundation, and the Harvard T.H. Chan School of Public Health shows that the US's high cost of health care is straining household budgets. More than 20% of black and Native American adults say that paying for medical care or prescription drugs is a serious issue.

The COVID-19 pandemic has profoundly disrupted health care and made many Americans sicker. Routine health care was disrupted, and chronic illnesses were often left unmanaged. While the worst of the pandemic has eased for the healthcare system, delays in medical care persist for some groups. Among US households where someone has been seriously ill, 24% of blacks, 18% of Latinos, and 18% of white households say they could not get medical care for serious illness when they needed it in the past year. It's even higher, 35%, for Native Americans.

As we can see, the research presents a worrying panorama for the poorest segments of the racial minorities of Latinos/Hispanics, African Americans, and Native Americans, mainly due to inflation that erodes the purchasing power of families. It is uncertain to say that inflation has cooled down. A single piece of data from a series does not allow concluding on the projection of an indicator. However, if the social situation remains bad for important segments, what can one think if the Fed's recessive policies have the effect of curbing demand and the unemployment rate increases substantially? It is known that the better-educated segments do better in the context of crisis than the less qualified workers, as these are the first to suffer from the drop in demand, notably in the personal services sector, which employs a large contingent of Latinos and African Americans.

This impact on the upcoming mid-term elections will be significant as it negatively impacts the approval of Joe Biden. In this sense, it is worth remembering the phrase of James Carville, adviser to the election of Bill Clinton in 1992: “It's the economy, stupid!”