US Inflation Accelerates as Trump Fails to Deliver on Price Control Promises

The United States witnessed an unexpected uptick in inflation during January, challenging former President Donald Trump’s recent campaign promises to swiftly reduce prices. Consumer price index figures revealed a 3% rise, marking an increase from December’s annualised 2.9% reading.

Monthly data showed a 0.5% increase, surpassing economists’ predictions of 0.3%. The core inflation rate, which excludes volatile food and energy costs, edged higher to 3.3% from December’s 3.2%, signalling persistent underlying price pressures.

Financial markets responded negatively to the news, with both the S&P 500 and Dow Jones industrial average declining approximately 1% at the New York opening. The crucial 10-year US treasury yield climbed to 4.629%, reflecting shifting economic expectations.

Trump’s pre-election rhetoric promised rapid price reductions, with definitive statements such as “prices will come down fast.” However, his post-victory stance has notably softened, with the president recently telling Time magazine, “It’s hard to bring things down once they’re up.”

The Federal Reserve’s potential interest rate decisions now face increased scrutiny. Trump advocated for lower rates on his Truth Social platform, suggesting this approach would complement his proposed import tariff strategy. However, economic experts caution that such tariffs might actually intensify inflationary pressures.

The inflation data emerges against a backdrop of historical context, where price growth peaked at 9.1% three years ago during pandemic-related supply chain disruptions. While significantly lower now, elevated consumer prices continue to challenge the narrative of an otherwise resilient economy.