Trump says inflation isn’t his No. 1 issue. So what will happen to consumer prices?

Two months ago, in his first network television interview after the election, Donald Trump declared that his victory was largely attributed to Americans’ frustration with immigration and inflation, specifically the rising cost of groceries.

“When you buy apples, when you buy bacon, when you buy eggs, they would double and triple the price over a short period of time,” he told NBC’s “Meet the Press.” “And I won an election based on that. We’re going to bring those prices way down.”

In Trump’s initial week back in the White House, his barrage of executive orders included measures aimed at tackling these price issues, albeit indirectly, by instructing federal agencies to begin “pursuing appropriate actions.” His efforts to lower energy costs are seen as pivotal, with the hope of creating a broader economic impact. However, much of his attention has been directed towards immigration policy, which he labeled as his “No. 1 issue” shortly after taking office.

Trump noted, “They all said inflation was the No. 1 issue. I said, ‘I disagree.’ I talked about inflation too, but how many times can you say that an apple has doubled in cost?”

He appears to be relying on voters to continue blaming former President Joe Biden for soaring prices. Trump’s remarks highlight the reality that presidents have limited means to swiftly lower inflation without inadvertently causing negative repercussions elsewhere in the economy.

On energy, there is potential for Trump to take more decisive action. He is advocating for the reduction of regulations and aims to increase land available for drilling. Additionally, he is attempting to persuade both domestic and foreign producers to boost output, potentially at the expense of their profits.

During a rally in Las Vegas, Trump criticized his Democratic predecessor for allowing prices to escalate and assured supporters that he would resolve the situation quickly. “When I think of Biden, I think of incompetence and inflation,” he stated.

Inflation hit a peak of 9.1% annually in June 2022, primarily due to worldwide supply chain disruptions stemming from the economic fallout of the COVID-19 pandemic. While overall consumer prices have decreased since then, they have risen slightly in recent months, from 2.4% in September to 2.9% in December, according to the latest available data. Economists warn that Trump’s proposals on tariffs and tax cuts could introduce new inflationary pressures and maintain elevated interest rates.

Vice President JD Vance, in a recent interview, defended the administration’s progress, asserting that “Prices are going to come down, but it’s going to take a little bit of time, right?” He cited, “Rome wasn’t built in a day.”

Trump’s apparent shift away from a focus on cost containment may open an avenue for Democrats to argue that he is neglecting the needs of working-class voters, which they hope will allow the party to regain influence in Washington.

Senator Chris Murphy, D-Conn., remarked that Trump seems to divert attention from inflation issues by discussing matters like acquiring Greenland or controlling the Panama Canal. “It’s catnip and it causes everybody to stop paying attention to their actual economic agenda, which has nothing to do with lowering costs and everything to do with rigging the economy to help the Mar-a-Lago crowd,” he commented.

In a recent Fox News interview, host Sean Hannity struggled to steer Trump towards a dialogue on the economy. “Let me get to the economy,” Hannity urged. “I’m running out of time.” Trump responded with confidence, asserting, “The economy is going to do great.” However, when discussing inflation, Trump pointed to the low rates during his initial term, claiming that prices wouldn’t have surged had he remained in office post-2020 election, despite higher inflation being a global trend post-pandemic.

It remains uncertain how Trump plans to persuade oil companies and foreign nations to significantly ramp up production, potentially at the cost of their profit margins. The Energy Information Administration has reported that domestic oil production has increased at an annual rate of approximately 8.4% over the last two years, averaging nearly 13.5 million barrels a day in October. Some of Trump’s aides advocate that this number could grow by an additional 3 million barrels per day.

Achieving such a production increase within a single year would likely require substantial shifts in the global market. The International Energy Agency estimates the world oil supply will rise by 1.8 million barrels per day to reach 104.7 million barrels a day. Trump has also expressed skepticism towards renewable energy sources like wind and solar, emphasizing a reliance on fossil fuels which may place additional pressure on the U.S. economy.

EJ Antoni, a research fellow at the Heritage Foundation, suggested that a surge in energy production under Trump could translate to lower prices across the economy. “If you’re going to bring down the cost of energy, you’re going to bring down the cost of all kinds of goods and services,” he noted.

Nonetheless, there’s a risk that Trump’s layered strategies could yield a rise, rather than a decrease, in prices. The deportation of undocumented migrants might reduce the availability of lower-wage labor, while the imposition of tariffs could lead to increased costs for consumers.

Trump mentioned that his strategy might involve urging the Federal Reserve to reduce interest rates, indicating he would “demand” lower rates from central banks. The Fed has traditionally viewed its independence as crucial for making necessary decisions to stabilize prices. In contrast to Biden, who emphasized this independence, Trump has criticized it.

The Fed began increasing its benchmark rates in 2022 to dampen borrowing costs and succeeded in alleviating some inflationary pressures, allowing for potential rate cuts late last year. Trump believes that amplified oil production could empower him to influence the Fed’s decisions.

When asked in the Oval Office whether he expects the Fed to heed his requests, Trump confidently replied, “Yeah.”