President Trump’s Claims on Inflation: A Fact-Check
In a speech at the World Economic Forum in Davos, Switzerland, President Donald Trump claimed that he had “defeated” inflation and reined in consumer prices over the past year. However, federal data suggests that some of these claims are overblown. The consumer price index, a key measure of U.S. inflation, was at a 2.7% annual rate in December, which is still above the Federal Reserve’s target of 2%.
According to Thomas Ryan, a North America economist at Capital Economics, “To say the US has ‘virtually no inflation’ is factually incorrect and a classic Trump overstatement.” Core CPI, which strips out energy and food prices, remains “uncomfortably high” at 2.6%, Ryan added. Mark Zandi, chief economist at Moody’s, also stated that inflation remains “uncomfortably high,” particularly for lower and middle-income Americans.
Inflation and Tariffs
The U.S. has an average effective tariff rate of 17.5%, the highest since 1932, according to the Yale University Budget Lab. This has put upward pressure on inflation, preventing the U.S. policymakers from claiming victory. Tariffs are a tax on U.S. imports, paid by the U.S.-based person or entity importing the goods. The effective tariff rate was around 2% at the beginning of 2025, and economists say that businesses haven’t passed their tariff costs along to consumers as much as expected.
However, based on today’s tariff rate, the average consumer will pay an additional $1,300 to $1,700 in 2026 compared to what they would have paid before 2025, when Trump took office, said John Riccio, associate director of policy analysis at the Yale Budget Lab. Joseph Gagnon, senior fellow at the Peterson Institute for International Economics, noted that inflation remains above the Fed’s 2% target but is “pretty close,” and most economists think it would have been on target except for the tariffs.
Prices for Everyday Expenses
When it comes to everyday expenses, some costs are lower than they were 12 months ago, but that’s not the case across the board. Mortgage rates, which typically follow the lead of long-term Treasury rates, are significantly lower than where they were a year ago, helped in part by Trump’s push to have Fannie Mae and Freddie Mac buy $200 billion in mortgage bonds.
The average rate for a 30-year, fixed-rate mortgage is 6.21% as of Tuesday, according to Mortgage News Daily, down from over 7% in January 2025. Rent payments have also been trending lower, with the national rent index falling 0.8% in December, according to real estate data site Apartment List’s monthly report. Car payments, on the other hand, have been going up, with the average monthly payment on a new-vehicle purchase reaching an all-time high in the fourth quarter of 2025.
Energy and Grocery Prices
A gallon of regular gasoline costs about $2.81, on average, as of Jan. 19, according to the Energy Information Administration, a nearly 10% decline from $3.11 per gallon on Jan. 20, 2025. However, not all energy prices are falling, with household electricity prices surging nearly 7% over the past year, according to the consumer price index. Grocery prices have risen a relatively muted 2.4% over the past year, but prices for various food items can be volatile, guided by idiosyncratic supply-and-demand factors.
Airfare and Travel
Airline fares declined more than 3% year over year in December, according to CPI data. The falling price of jet fuel has supported lower airline fares, and weakening inbound travel demand due to politics may also be playing a role. However, to travelers, it may not seem that airfares are declining, because added charges can inflate travelers’ costs, said Sally French, a travel expert at NerdWallet.
CPI data doesn’t include extra charges that are separate from purchases for basic economy seats, for example. Those low base fares typically come with upcharges in the form of ancillary fees to check bags, to guarantee an aisle seat or to secure early boarding, French noted.
Conclusion
In conclusion, while President Trump claims to have “defeated” inflation, the data suggests that inflation remains a concern, particularly for lower and middle-income Americans. The U.S. has an average effective tariff rate of 17.5%, which has put upward pressure on inflation. Everyday expenses such as mortgage rates, rent, and energy prices have seen some declines, but car payments and grocery prices have risen.
Smart Tip for Readers
To better understand the impact of inflation on your personal finances, consider tracking your expenses and adjusting your budget accordingly. By staying informed about economic trends and making informed financial decisions, you can navigate the complexities of inflation and make the most of your money; read more about President Trump’s claims on inflation Here
