Honestly, walking into a grocery store in 2022 felt like a jump scare. You’d pick up a carton of eggs or a gallon of milk, look at the price tag, and wonder if you’d accidentally walked into a high-end boutique instead of a Safeway. It wasn't just in your head. The highest inflation under Biden hit a staggering peak that most Americans hadn't seen in their entire adult lives. We are talking about a 40-year high that fundamentally changed how people viewed their bank accounts and the "American Dream."
That June 2022 Breaking Point
If you want to pinpoint the exact moment the thermometer burst, it was June 2022. That is when the Consumer Price Index (CPI) hit 9.1%.
To put that in perspective, for decades, we were used to inflation hovering around 2%. Seeing it leap toward double digits was a massive shock to the system. It wasn't just one thing getting expensive; it was basically everything all at once. Gasoline was the most visible villain, with prices at the pump screaming past $5.00 a gallon in many parts of the country. I remember seeing photos of gas station signs where the numbers were literally taped on because the digital displays weren't designed to go that high.
It’s easy to just blame "the government" and move on, but the reality is way messier. We were dealing with the perfect storm. The world was still trying to shake off the COVID-19 cobwebs. Factories in China were shutting down one week and reopening the next. Ships were backed up in the Port of Los Angeles like a Friday afternoon traffic jam on the 405.
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Then, Russia invaded Ukraine.
That single event sent global energy and food markets into a tailspin. Suddenly, the "breadbasket of Europe" was a war zone, and Russian oil was being sanctioned off the global market. You can’t have the world's major suppliers of grain and fuel go offline without everyone else paying the price at the register.
Did the Stimulus Checks Actually Cause This?
This is where things get spicy in the world of economics. You’ve probably heard the argument that the American Rescue Plan (ARP)—that $1.9 trillion stimulus package passed in early 2021—was the primary culprit.
Critics like Larry Summers, who actually served under Obama and Clinton, warned early on that the plan was too big. He argued it would overheat the economy. And, to be fair, he wasn't entirely wrong. When you pump that much cash into households while the supply of goods is still restricted by pandemic lockdowns, prices are going to go up. It's basic supply and demand.
But—and this is a big "but"—economists at the Federal Reserve and institutions like the Brookings Institution found that while the ARP contributed, it wasn't the only driver. Some studies suggest fiscal stimulus accounted for about 3 percentage points of the inflation spike. The rest? That was the supply chain chaos, the shift in consumer spending from services (like concerts) to goods (like home office gear), and the energy shock from the war in Ukraine.
It's sorta like a fire. The stimulus might have been the gasoline, but the supply chain issues were the dry timber, and the Ukraine war was the match.
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The "Transitory" Mistake
One of the biggest blunders during this period wasn't a policy, but a word: Transitory.
For most of 2021, Treasury Secretary Janet Yellen and Fed Chair Jerome Powell kept insisting that the price hikes were "transitory." They thought it was just a temporary glitch that would fix itself once the ports cleared up. They waited. And waited.
By the time they realized the inflation monster wasn't going away on its own, it had already moved into the "core" parts of the economy—things like rent and services. This delay meant the Federal Reserve had to slam on the brakes much harder later on, raising interest rates at the fastest pace since the early 80s.
The Rent and Wage Gap
Even when the highest inflation under Biden started to cool off in 2023 and 2024, the "vibecession" stayed. Why? Because while the rate of inflation slowed down, prices didn't actually drop back to 2020 levels. They just stayed high.
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If your favorite sandwich went from $8 to $12, and then the next year it stayed at $12, the "inflation rate" for that second year is 0%. But you're still out an extra $4 every time you eat.
Wages did grow during this period—honestly, they grew pretty fast—but for a long time, they couldn't keep up with the cost of living. Real wages (what your money actually buys) actually fell for a significant portion of Biden's term. It wasn't until late 2023 and 2024 that paychecks finally started consistently outpacing the price of eggs again.
What about the Inflation Reduction Act?
The name is a bit of a misnomer in the short term. Most non-partisan analysts, including the Congressional Budget Office (CBO), noted that the Inflation Reduction Act wouldn't actually do much to lower inflation in 2022 or 2023. Its biggest impacts are long-term—things like allowing Medicare to negotiate drug prices and investing in green energy.
Calling it the "Inflation Reduction Act" was a masterclass in political branding, but it didn't provide the immediate relief people were looking for at the grocery store.
How We Got Out of the Woods (Mostly)
So, how did the numbers finally come down? It was a combination of things that finally clicked.
- The Fed's Hammer: Interest rates went from near zero to over 5%. This made it more expensive to buy a car or a house, which cooled down spending.
- Supply Chain Healing: The ships finally got unloaded. Factories went back to full capacity. The "kinks" in the system smoothed out.
- Energy Stabilization: Oil prices eventually backed off their $120-per-barrel highs, giving everyone a breather at the pump.
By early 2026, the panic has largely subsided, but the scars on the American psyche remain. People are much more sensitive to price changes now. We've learned that the global economy is a lot more fragile than we thought.
Actionable Insights for the "New Normal"
If you're still feeling the sting of the price hikes from the last few years, there are a few tactical moves you should consider to protect your purchasing power.
- Audit Your "Sticky" Expenses: Inflation often hides in subscriptions and insurance premiums that quietly tick up 10% a year. Call your providers. Switch if you have to.
- Re-evaluate Your Cash Holdings: With interest rates having stayed higher for longer, "lazy money" in a standard savings account is a mistake. High-yield savings accounts or CDs are essential to keep your savings from being eaten by the remaining 2-3% inflation.
- Focus on Skills, Not Just Saving: In a high-price world, your biggest asset is your earning power. The "Great Resignation" showed that the biggest raises often come from switching roles, not waiting for a 3% annual merit increase that doesn't even cover the cost of bread.
- Watch the Core CPI, Not Just Gas: Gas prices are flashy, but Core CPI (which excludes food and energy) tells you if the underlying economy is actually stable. If Core CPI stays high, expect interest rates to stay high, which means your credit card debt will stay expensive.