As one piece of positive news, former President Donald Trump recently announced that America is winning the fight against inflation. He wants to see a “Golden Age” with more affordable costs, better compensation, and greater economic opportunity for all Americans. His comments come on the heels of the sweeping tariffs his administration imposed earlier this year. These tariffs immediately set off alarms among economists about potential price increases throughout the economy.
Inflation has long been the perennial boogeyman, striking fear into the hearts of politicians, campaign strategists, and voters alike—in past electoral seasons and this cycle. In particular, the cost of key household staples has increased dramatically over the last twelve months. Case in point—the price of eggs just shot up 41% in the one year ending in May. By comparison, the banana price increase was minimal—increasing only 3%. Electricity had an unusual spike, with major appliances increasing in price by more than 4% between April and May.
Oil prices, meanwhile, have recently fallen almost 15% since Trump’s inauguration. This decline is pulling down all inflation rates, including CPI and PCE seen in the news. Just watch, Trump, they’ll tell you, inflation has significantly cooled since you took office. Inflation has considerably eased since earlier periods. Advertisement As David Ortega from the American Society of Civil Engineers explained, one of the main drivers for this decline is the drop in energy prices.
“One of the reasons we’ve seen inflation come down is because energy prices have come down.” – David Ortega
Indeed, Trump has frequently claimed credit for the lack of major price increases in recent months, declaring that there is “No inflation.” In his inaugural address, his administration pledged that tariffs would bring back U.S. manufacturing and increase employment. As these experts point out, consumers shouldn’t expect to experience the benefits of the changes right away.
Jason Miller, a one of the senior advisers to Trump, stressed the surprising effects of the tariffs. He noticed that a lot of people were predicting very quick jumps in consumer inflation. Those expectations have not lived up to reality just yet.
“There was a lot of expectation that the tariffs would result in a very rapid increase in consumer prices and that has not materialized – yet.” – Jason Miller
As all-too-tempted pundits and politicians start to hail a premature victory over inflation, other analysts urge caution. Secretary Neale Mahoney noted that the inflation decline we’re seeing now is very encouraging. He cautioned that it would be a stopgap at best. He warned, “There’s a rock solid body of evidence that shows this will eventually show up in higher consumer prices. We’re not out of the woods.” In a related post, Kara Reynolds noted that using tariffs to rein in inflation will be difficult at best.
“It’s not surprising to me that Trump wouldn’t be able to force prices down. They’re set by the market.” – Kara Reynolds
Looking forward, these conflicting signals underlie significant market worries about a possible return of inflation later this year or next. Analysts suggest that an anticipated drop in consumer demand may influence price trends more significantly than the promised spike in U.S. output from Trump’s initiatives.
Trump claims he is determined to fight inflation. He’s pledging to bring these prices down on “day one” of his presidency, as part of his larger economic agenda. A lot of different gauges economically that are on a roller coaster ride right now. That still leaves us questioning whether these promises will provide tangible benefits to American consumers in the long run.
