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 stated that he attributed his victory to Americans’ dissatisfaction with immigration and inflation, particularly regarding the rising cost of groceries.
During his interview with NBC’s “Meet the Press,” he remarked, “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. I won an election based on that. We’re going to bring those prices way down.”
However, in Trump’s initial week back in the White House, his executive orders did not directly address rising grocery prices, aside from instructing federal agencies to begin “pursuing appropriate actions.” He is focused on reducing energy costs, hoping that this would create positive economic effects. His primary focus has shifted towards immigration, which he labeled as his “No. 1 issue” shortly after being sworn in.
Trump expressed his disagreement with the notion that inflation should be the main concern, saying, “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?”
The former president is relying on voters to absolve him of blame, maintaining that high prices are primarily the responsibility of former President Joe Biden. Trump’s statements highlight the reality that presidents have limited control over inflation, especially without negatively impacting other economic sectors.
Trump can take more decisive actions regarding energy. He aims to minimize regulations and expand the land available for drilling, while also attempting to persuade both domestic and foreign oil producers to increase their output, even if that impacts their profits.
At a rally in Las Vegas, he criticized Biden for allowing prices to rise and committed to swiftly addressing the issue, stating, “When I think of Biden, I think of incompetence and inflation.”
Inflation had peaked at a 9.1% annual rate in June 2022 as a consequence of global supply chain disruptions after the economic fallout from the pandemic. Although overall consumer prices have decreased since then, they have been increasing recently, moving from 2.4% in September to 2.9% in December. Economists caution that Trump’s proposed tariffs and tax cuts could introduce new inflationary pressures, potentially keeping interest rates high.
Vice President JD Vance defended the administration’s economic efforts in an interview with CBS’ “Face the Nation,” stating, “Prices are going to come down, but it’s going to take a little bit of time, right? Rome wasn’t built in a day.”
Trump’s shift away from addressing inflation may provide an opportunity for Democrats to claim he is neglecting working-class voters, which could help them regain influence in Washington.
Senator Chris Murphy, D-Conn., asserted that Trump preferred to divert attention from inflation with discussions about acquiring Greenland or taking control of 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 said.
While appearing on Fox News, host Sean Hannity attempted to steer the conversation back to economic issues, telling Trump, “Let me get to the economy. I’m running out of time.” Trump responded definitively, “The economy is going to do great.”
When discussing inflation during the interview, Trump recalled how lower inflation figures characterized his first term, insisting that prices wouldn’t have surged if he had remained president post-2020, despite the fact that rising inflation was a global trend following the pandemic.
It remains uncertain how Trump would convince oil companies and foreign nations to boost production without affecting their profit margins. The Energy Information Administration has indicated 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 per day in October. Some aides suggest this could result in an additional increase of 3 million barrels a day.
A significant escalation in production within a single year would be challenging without substantial alterations to the global oil market. The International Energy Agency estimates a worldwide oil production increase of 1.8 million barrels per day to 104.7 million barrels daily. Furthermore, Trump has voiced opposition to renewable energy sources, putting additional pressure on the U.S. economy to rely on fossil fuels.
EJ Antoni, a research fellow at a conservative think tank, noted that potential increases in energy production under Trump could lead to reduced 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 stated.
However, Trump’s overall strategy may inadvertently raise prices rather than decrease them. The deportation of undocumented migrants could eliminate a segment of lower-wage workers from the labor market. Additionally, the costs of tariffs, which are taxes imposed on foreign imports, could ultimately be passed on to consumers.
Trump has also indicated that he might publicly pressure the Federal Reserve to reduce interest rates. While addressing the World Economic Forum, he mentioned he would “demand” lower rates. The Fed views its political independence as crucial for making difficult decisions to stabilize prices, an aspect that Biden has sought to protect, in contrast to Trump’s perspective.
The Fed raised its benchmark rates starting in 2022 to discourage borrowing and successfully reduced inflationary pressures to the extent that they could consider lowering rates late last year. Trump believes increasing oil production could empower him to influence the Fed’s decisions.
When asked whether he expects the Fed to heed his advice, Trump replied simply, “Yeah.”
