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3mo ago

Rising Inflation Tests Trump Administration’s Economic Promises

Recent data shows inflation climbing again, raising concerns over federal policies, trade barriers, and consumer sentiment.

Organic produce is displayed at a supermarket in Monterey Park, California, on February 12, 2025.
President Donald Trump in the Oval Office of the White House as he announces reciprocal tariffs, on Feb. 13, 2025.

Overview

  • The Consumer Price Index (CPI) rose to 3.0% in January, with core inflation showing persistent upward pressure, while the Producer Price Index (PPI) increased by 3.5% year-over-year.
  • Economists point to federal spending during the pandemic as a key driver of inflation, with entitlement programs and interest payments on debt representing significant fiscal challenges.
  • President Trump’s proposed government spending cuts, including the elimination of the Department of Education, face criticism for addressing only a small fraction of federal expenditures.
  • Protectionist trade policies, such as tariffs on imports, are predicted to further drive up prices, with the Federal Reserve Bank of Boston estimating a potential 0.8% inflation increase from additional tariffs.
  • Consumer sentiment has declined, with inflation expectations rising to 4.3%, signaling concerns over economic stability and the administration’s focus on inflation control.