Trump says inflation is dead. Most data says: Not quite.
The White House points to a seven-month snapshot showing low inflation, but economists say prices are closer to 3 percent. The shutdown delays fresh data.
Today at 5:00 a.m. EDT
President Donald Trump and Federal Reserve Chair Jerome H. Powell look at a document as they tour the agency’s $2.5 billion renovation project on July 24 in Washington. (Chip Somodevilla/Getty Images)
In this article
- Inflation helped elect Trump
- White House’s tighter view of inflation
- What does the Fed say?
- Why Trump says inflation is falling
In this article
By Andrew Ackerman and Alyssa Fowers
President Donald Trump says he beat inflation. But several conventional measures of rising prices paint a different picture.
Most experts agree inflation has picked up in recent months, in part because of Trump’s tariffs. Economists expect more tariff-driven price increases in the months to come.
Get a curated selection of 10 of our best stories in your inbox every weekend.
Here’s a brief history of inflation and where the data shows it is today.
Inflation helped elect Trump
Inflation took off during the Biden administration as the economy roared back from the pandemic, climbing to near double-digit levels. While price growth has slowed over the past two years, it remains stubbornly above pre-pandemic norms. The long stretch of above-average increases has left the cost of everyday goods and services about 25 percent higher than before the pandemic.
When Trump took office in January, the consumer price index had increased to 3 percent over the previous year. In August, that same index showed inflation has barely budged, remaining at 2.9 percent, the most recent available data.
Follow Trump’s second termFollow
Trump says he brought inflation down. The White House also said that inflation is at 2.3 percent, which would be well below the official inflation figures that appear in headlines every month.
White House’s tighter view of inflation
The White House points to a seven-month stretch of data showing prices are increasing at a very low rate as proof Trump has reined in runaway consumer costs.
The administration’s snapshot of inflation is based on a way of looking at data called “annualization,” which predicts a full year of change based on a shorter time period.
The White House achieved a 2.3 percent estimate of inflation by looking at how much the consumer price index changed between January and August — and assuming that trend will continue through the rest of the year.
But the administration’s way of looking at the data is unusual.
Seven months of data isn’t usually enough to pin down the true direction of inflation, which can be swayed in the short term by one-off events.Applying Trump’s method to other points in the past year shows how far actual annual inflation can stray from an annualized estimate. For example, the 12-month inflation rate in October 2024 was much lower than an annualized estimate based on seven months of data.
Generally, inflation is measured on an annual basis, comparing the most recent month of data with the same month in the previous year.
That math underlies nearly every headline and notification about inflation. It’s the formula that the Federal Reserve uses when setting goals for inflation. The reason the White House’s estimate of 2.3 percent sounds low is because it is being compared with more-familiar annual estimates.
So swapping from annual inflation — based on 12 months of price changes — to annualized inflation — estimating what 12 months of price changes might look like — is a big change, even if the words sound similar.
There’s another caveat to the White House’s insistence that tariffs haven’t meaningfully increased inflation. The latest data on prices is from August, the same month that many tariffs came into effect. Price increases may not have had time to trickle down to consumers. September’s data was expected on Oct. 15 but has been delayed to Oct. 24 because of the government shutdown.
What does the Fed say?
The Federal Reserve is in charge of keeping inflation in check through its interest rate policy. After leaving rates unchanged all year, Fed policymakers cut rates last month and are expected to do so again in late October.
The Fed seeks to keep inflation from running too hot, with the goal of a 2 percent pace. Its preferred government data yardstick, the personal consumption expenditures index, has been running above that figure, most recently at an annual rate of 2.7 percent. A “core” reading that strips out volatile food and energy prices is at 2.9 percent.
The Fed has grown more worried lately about cracks in the labor market than the risks of inflation fueled by tariffs.
That’s partly because tariffs have been less disruptive than initially expected, as businesses found ways to absorb some of the costs and delay passing tariffs on to customers. U.S. consumers currently shoulder 55 percent of tariff costs, according to Goldman Sachs, but could bear up to 70 percent by the end of next year.
Why Trump says inflation is falling
The White House has pointed to a surge of factory investment as evidence that its push to bring production back to the United States hasn’t come at an economic cost. The White House also says that the president’s tariffs have yet to create meaningful headwinds for growth.
“Trillions in historic investment commitments to make and hire in America as well as annualized inflation trending at a low and cool 2.3 percent rate prove that the Administration is delivering economic relief for the American people while laying the groundwork for a long-term restoration of American Greatness,” White House spokesman Kush Desai said in a statement.
This explanation underscores the White House’s position that “inflation has been defeated,” as the president told the U.N. General Assembly last month.
Andrew Van Dam contributed to this report.
View this Washington Post article CLICK HERE
Media Air Base, LLC 
Leave a comment