Trump softens the tone of inflation after pledging prices

President Trump has promised voters that if he is elected, he will implement a policy that will lower prices on the “first day” of his inauguration.

But three weeks after his term, Trump and White House officials were more measured about how they discussed efforts to tame inflation. They began to downplay the possibility that consumer costs like food could fall anytime soon, reflecting the limited power that the president has to control prices. They are primarily determined by global economic forces.

The shift tone allows Trump to reset expectations about how quickly prices will drop when pursuing policies such as tariffs and tax cuts.

Trump and his advisors believe that expanding regulations on energy production and rollback in the United States will reduce costs. They also argued that some of Trump's tax proposals, such as eliminating overtime taxes, would curb inflation by giving workers more incentives to work longer hours, and thus expanding the workforce. It's.

But in an interview this week, Trump bedded when he was pushed against his family, struggling with high prices, as he began to feel some relief. He suggested that his policies would make America a richer country, which would theoretically reduce the burden on consumers by increasing revenue.

“I think we're going to get rich. “We're borrowing $36 trillion, because all these countries have made us take advantage of.”

During a news briefing last week, White House spokesman Karoline Leavitt said Trump is doing everything he can to ease the cost of living in the country. But when asked at what point Americans would begin to experience relief from high consumer prices, she said, “I don't have a timeline.”

Vice President JD Vance has eased expectations that consumer prices will always fall soon.

“Rome was not built in one day,” Vance told CBS News last month, explaining that it would “take a little while” as grocery prices would drop.

The pace of rising grocery prices is much slower than they were a few years ago. At one point in 2022, when the recent inflation surge was at its worst, these costs recorded an increase of around 14% per year. As of December, the category has only increased by 1.8% over the past 12 months, according to data from the Bureau of Labor Statistics.

However, these rising cooling prices do not imply a lower price. Most are even more expensive than a year ago, and some are much more expensive. Consumers experience sticker shock when buying eggs, coffee and other staple foods.

As of December, eggs averaged $4.15 from under $3 six months ago. Egg prices have risen by nearly 40% from last year. And it is likely to get worse amid the outbreak of avian flu, and there is a shortage of eggs as farmers culled herds to prevent the spread of the disease.

Popular restaurant chains such as Waffle House have added an extra egg fee to their menu, but grocery stores across the country are beginning to limit the number of eggs customers can buy.

The number of inflation scheduled to be released on Wednesday is projected to indicate a rise in consumer prices of 2.9% per year in January. Core inflation, which excludes volatile food and energy prices, is projected to continue to last above 3%.

Ahead of the recent rise in food prices, economists have already had the advantage over further flare-ups in prices caused by Trump's tariffs. The president has imposed an additional 10% tariff on China and a 25% tariff on foreign steel and aluminum. He temporarily suspended blanket duties in Canada and Mexico, but they could eventually come into effect.

On the campaign trail, Trump also raised a universal tax on all products coming into the US. The president is now poised to impose “mutual” tariffs that match the tariffs that other countries have on US exports.

Economists are worried about a one-off price rise at a moment when inflation rates are higher than the Fed's 2% target. Whether or not the outcome passes will primarily be how Trump constitutes his policy, the scope of retaliation measures from other countries, and whether consumers will respond by recouping their spending overall. It depends on whether it's.

When Trump launched his first trade war in 2018, the Fed decided that it could be looked into or ignored what would be expected to raise the price of a particular goods or service. At the time, inflation was well below the 2% target, with growth concerns being paramount, and in 2019 we were able to ultimately lower interest rates.

Many economists believed that Trump's promise to lower consumer prices was unrealistic, and that deflation was being fooled by the fact that a massive drop in prices would not be a sign of a healthy economy.

The way to track how consumers and businesses think about future inflation speaks to complex photos of how concerned Americans are at this point.

One preliminary volatile gauge released by the University of Michigan on Friday saw inflation forecasts for the next 12 months increase full percentage points by 4.3% in February. The survey shows that the number of Republicans, Democrats and independents has all been declining, showing a “broad” dip in consumer sentiment from the day after Trump's inauguration until February 3rd. It has been shown.

Another survey published Monday by the Federal Reserve Bank of New York showed no identifiable changes in the way consumers were thinking about short-term inflation risks as of January. However, over a five-year period, expectations showed a slight rise to 3%. Policymakers focus on these long-term measures that tend to more accurately reflect future inflation developments.

The CBS News vote, released this week, showed that 66% of Americans think Trump is not enough to lower prices.

Trump's term is still very early, but Democrats are underscoring signs of higher prices as an indication that Trump's policies are not working.

“What we really face here is an administration that campaigns and doesn't do that,” Maryland Democrat Sen. Chris Van Hollen said on Tuesday that Jerome H. He spoke at a hearing between the Federal Reserve Chair and the Senate Banking Committee. .