Will Trump really lower your grocery bill? Most Americans doubt it
President-elect Donald Trump said he won the presidency on the promise he would lower the cost of groceries. But days before he takes the oath of office, most Americans remain skeptical he can deliver on that promise.
More than three in five Americans are slightly or not at all confident Trump will lower the cost of food, housing or health care in 2025, according to the latest AP-NORC poll.
Republicans expressed greater confidence in Trump than Democrats or independents. Still, less than half of them have high confidence in his ability to lower costs in those categories. Only one-third of Republicans have high confidence he will lower health care costs, while 44% believe grocery prices will go down.
Trump’s promise to lower grocery costs
“I won on groceries, it’s a very simple word, groceries,” Trump told NBC’s Kristen Welker in an interview published Dec. 8. “I won an election based on that. We’re going to bring those prices way down.”
“I’d like to bring them down. It’s hard to bring things down once they’re up. You know, it’s very hard,” he said. “But I think that they will. I think that energy is going to bring them down. I think a better supply chain is going to bring them down.”
This week, Trump’s pick for treasury secretary, Scott Bessent, fielded questions from Democrats and Republicans about consumer prices during his Senate confirmation hearing.
When asked if prices for families would go up or down under Trump’s policies, Bessent replied, “I believe that inflation will be much closer to the Federal Reserve’s target of 2%.”
Lowering inflation vs lowering prices
Lowering inflation and lowering prices are two different targets. Lowering inflation would slow the increase in prices, while lowering prices would result in deflation, when the inflation rate falls below 0%.
In 2024, consumer prices rose 2.9% on the year, according to December data released this week by the Bureau of Labor Statistics. The rate of inflation rose three months in a row to end the year after bottoming out at 2.4% in September.
December’s surge was fueled by higher food and energy costs. The energy index rose 2.6% on the month. Food prices went up 0.3% on the month and 2.5% on the year. Food prices are up about 28% over the past five years.
Walgreens CEO says locking up popular items hurts more than it helps
Walgreens CEO Tim Wentworth said the company’s added security efforts to prevent theft, such as locking up popular items behind glass doors, have backfired over the years. Wentworth’s acknowledgment came during the company’s first-quarter earnings call with investors on Tuesday, Jan. 14.
“It is a hand-to-hand combat battle still, unfortunately,” Wentworth said. “But it does impact how sales work because when you lock things up, for example, you don’t sell as many of them. We’ve kind of proven that conclusively.”
After reporting a more than 50% increase in “shrink” — otherwise known as lost inventory — in 2020 and 2021, the company invested in added security, including security guards in some stores.
Now, Wentworth said that Walgreens is renewing its focus on customer experience while balancing it with anti-theft efforts.
Wentworth did not go into details about the new anti-theft efforts or if it will mean an end to popular items being locked up.
Wentworth only said the drugstore chain is taking “creative” steps to address retail theft and improve customer experience.
Despite the challenges with the anti-theft policy, the pharmacy giant outperformed first-quarter earnings expectations.
Wentworth attributed the better-than-expected numbers to a revamped focus on customers’ needs and expanding offerings of health and wellness products.
The company said the strategic closures of some stores also helped with improved performance.
Wentworth also revealed Walgreens plans to close around 450 additional underperforming stores in 2025 and further improve its line of health and wellness products.
The company reportedly operates more than 8,000 stores in the United States and Puerto Rico.
Inflation rises 2.9% in 2024 as consumer prices heat up heading into 2025
Inflation continued to head in the wrong direction in December. Consumer prices rose 2.9% on the year, hotter than the 2.7% rise in November.
On the month, prices rose 0.4%, the highest monthly rise since February. In November, prices rose 0.3%.
It’s the third month in a row the key inflation gauge rose. It’s now at its highest point since July, according to Bureau of Labor Statistics data.
Experts believe the December rise in prices is fueled by higher food and energy costs. The energy index rose 2.6% on the month but is still down 0.5% on the year, while food is up 0.3% on the month and 2.5% on the year. Food prices are up about 25% over the past five years.
Core inflation, which strips out the more volatile food and energy indexes, came in slightly cooler than expected at 3.2% on the year, after several months at 3.3%. On the month, core prices rose 0.2%. Core inflation has not fallen below 3.2% since April 2021.
After peaking at 9% in June 2022, overall consumer prices started their long descent toward the Federal Reserve’s 2% inflation target. The Fed raised its benchmark interest rate to the highest level seen in decades to restrict the money supply and depress inflation.
In September, consumer price inflation reached 2.4%, but since then has climbed in the opposite direction.
“While we do not believe progress in the fight against inflation is going into reverse, we do see it stalling this year as earlier tailwinds to disinflation from supply chain improvements and lower commodity prices have faded and as fresh headwinds from trade policy are likely to emerge,” Wells Fargo economists Sarah House and Aubrey Woessner wrote in a note previewing the December report.
New trade and immigration policies from the incoming Trump administration are also Federal Open Market Committee member minds. The committee sets the Fed’s rate.
In December, members projected overall inflation will increase slightly in 2025, while core inflation will decrease.
“Almost all participants judged that upside risks to the inflation outlook had increased,” minutes from the meeting read. “As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”
In that December meeting, members still forecast two interest rate cuts in 2025. However, probability markets are penciling in just one cut in July as of Wednesday morning.
The latest consumer inflation report follows last week’s jobs report. It showed the U.S. economy added 256,000 jobs in December, roughly 100,000 more than expected.
US economy wows with 256,000 jobs added in December, more than expected
The U.S. economy added 256,000 jobs in December, roughly 100,000 jobs more than expected. The unemployment rate ticked down to 4.1% from November’s 4.2%.
In December, retail trade added 43,000 jobs, while it lost 29,000 jobs in November. Health care, government and social assistance, along with leisure and hospitality, all saw double-digit gains as well.
While the country saw a rise in unemployment earlier in 2024, the Bureau of Labor Statistics said the unemployment rate has held steady at 4.1% or 4.2% for the past seven months.
“I continue to believe that the U.S. economy is on a solid footing,” Federal Reserve Governor Christopher Waller said earlier this week. “I have seen nothing in the data or forecasts that suggests the labor market will dramatically weaken over coming months.”
Labor market weakness is what triggered the Federal Reserve to start cutting its benchmark interest rate in September, even as progress on inflation stalled. After a jumbo-sized 50-basis-point cut, the Fed made two more 25-basis-point cuts to close out the year, dropping the federal funds target range to 4.25% to 4.5%, a full percentage point below its 2024 peak.
However, as the labor market showed renewed resilience, inflation started to rise. Consumer prices rose 2.7% for the year ending in November, after rising 2.6% in October and 2.4% in September.
“This minimal further progress has led to calls to slow or stop reducing the policy rate,” Waller said Wednesday, Jan. 8. “However, I believe that inflation will continue to make progress toward our 2% goal over the medium term and that further reductions will be appropriate.”
In December, the Fed released its latest economic projections, which forecast just two cuts in 2025, down from the previous forecast of four. In response, interest rate expectations rose.
This week, the average rate of a 30-year mortgage hit 6.93%, the highest level since July, and nearly a full percentage point higher than when the Fed started cutting its rate in September.
Why are mortgage rates going up while the Fed is cutting rates? Watch this video.
On Thursday, Jan. 9, the probability market had the Fed holding rates steady until June. It was split on whether the Fed would do a second cut in December or hold steady at one cut for the year.
Minutes released this week from the Fed’s last meeting revealed added concern about inflation. Without naming President-elect Donald Trump or his tariff and immigration policies, the Federal Open Market Committee multiple times brought up the unknown impact those policies might have on the economy.
“Almost all participants judged that upside risks to the inflation outlook had increased,” the minutes read. “As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”
Fed forges ahead with third interest rate cut despite growing inflation
The Federal Reserve continued its rate-cutting campaign Wednesday, Dec. 18, marking the third cut of 2024. The central bank shaved off another 25 basis points from its benchmark rate, in line with expectations.
The latest decision sets the benchmark interest rate between 4.25% and 4.5%, down from 4.5% and 4.75%. The rate sat above 5% for more than a year between 2023 and 2024 while the Fed attempted to get a hold of rampant inflation brought on by the COVID-19 pandemic aftermath.
The central bank has a dual mandate of maintaining price stability and full employment.
But price stability is starting to go back in the wrong direction. Consumer price inflation rose 2.7% annually in November, after dropping to a 2.4% annual rate in September. Monthly prices rose 0.3% from October, according to the Bureau of Labor Statistics.
Meanwhile, The U.S. jobs market beat expectations in November, adding 227,000 jobs after a bleak October report driven by hurricanes and strikes. However, the unemployment rate ticked up to 4.2%.
The Fed’s decision comes just over a month before President Joe Biden leaves office. President-elect Donald Trump has been critical of Fed Chair Jerome Powell in the past but has publicly stated he will not try to fire him before his term ends in 2026.
Core inflation, which removes more volatile food and energy prices, rose 3.3% annually and 0.3% compared with October. Both headline and core inflation came in line with expectations, according to FactSet. However, the rate of inflation has ticked up slightly in the last two reports.
The cost of shelter rose 4.7% annually and 0.3% since October. Shelter accounts for nearly 40% of monthly inflation, BLS reported.
Meanwhile, the food index rose just 2.4% annually and ticked up 0.4% since October. Food at home, or groceries, rose 0.5% compared to October.
The overall energy index fell 3.2% as the price of energy services dropped 19.5% annually. The price of used vehicles fell 3.4% compared with the same month last year.
The Federal Reserve’s dual mandate is to control price inflation and maintain full employment. Inflation has yet to hit its target of 2%. The U.S. jobs market beat expectations in November, adding 227,000 jobs after a disappointing October report. Meanwhile, the unemployment rate notched up to 4.2% from 4.1%.
The latest inflation report comes a week before the Federal Open Market Committee sets monetary policy. The federal funds rate now sits at 4.5% to 4.75%. The Fed is expected to cut rates by 25 basis points in December 2024. That would mark the third rate cut of 2024.
NY Gov. Hochul pitches $500 inflation checks as her popularity suffers
New York Gov. Kathy Hochul, D, wants to send inflation checks to millions of New Yorkers. Under her proposed budget for next year, the state would send $500 checks to families making up to $300,000, while individuals making up to $150,000 would receive $300.
“We’re told inflation is getting better,” Hochul said during the policy announcement. “It’s supposedly coming down. But let me ask this question: Do any of you feel like you have more money in your pockets today? No, no, no, I didn’t think so.”
The total cost of the proposed inflation rebates is $3 billion. Gov. Hochul said the state received a windfall in that amount after higher prices brought in more sales tax revenue than expected.
“I’m sure there are some elected officials or some special interest groups will weigh in and say, ‘Oh, I know how that extra money should be spent,’” Hochul said. “But here’s my message: I’m on your side. I believe that this extra inflation-driven sales tax revenue shouldn’t be spent by the state. It’s your money, and it should be back in your pockets.”
Costs are high, and New Yorkers are feeling the strain on their wallets.
I want to give families making less than $300,000 an Inflation Refund check for $500.
If passed by the state Legislature, checks would go out in the fall of 2025. Her announcement comes as Hochul deals with a popularity issue and a potential Democratic challenger to her seat.
In a new Siena College poll out Tuesday, Dec. 10, only 39% of New Yorkers said they have a favorable opinion of Gov. Hochul, who is up for reelection in 2026.
Only a third of respondents said they would reelect her, while 57% said they’d prefer someone else. Narrowing it down to just Democrats, 48% said they would vote to reelect Hochul.
In the same poll, New York voters said the top priority for state government to address is the cost of living.
Bronx Rep. Ritchie Torres, D, is weighing a potential primary challenge to Hochul.
He posted on X, “A one-time check will not compensate for the double-digit increases in inflation that New Yorkers have suffered during the Governorship of Kathy Hochul. For three years, the Governor has ignored the millions of New York families crippled by the crushing cost of groceries and gasoline.”
Haunted by the specter of a primary challenge, Governor Hochul is proposing an “inflation refund.” A one-time check will not compensate for the double-digit increases in inflation that New Yorkers have suffered during the Governorship of Kathy Hochul. For three years, the…
Thanksgiving dinner will cost less for the second year despite bird flu
Inflation has been a major topic of discussion in recent years. While the rise in grocery prices has slowed down to a 1% increase over the last 12 months, the price of Thanksgiving dinner fell for the second straight year.
A Thanksgiving meal for 10 people will cost $58.08 in 2024, or $5.81 per person, according to the American Farm Bureau Federation’s 39th annual Thanksgiving dinner survey.
The price of Thanksgiving fell more than 9% since reaching a record high of $64.05 in 2022. That said, the price of a feast for 10 is still 19% higher than before the COVID-19 pandemic. In 2019, it cost $48.91 to feed a group of 10 for the holiday.
Turkey remains the center of any Thanksgiving dinner. The average price of a 16-pound turkey is $25.67, a savings of 6% from last year. Despite the savings, the American Farm Bureau Federation says avian influenza is at play in 2024.
“The American turkey flock is the smallest it’s been since 1985 because of avian influenza, but overall demand has also fallen, resulting in lower prices at the grocery store for families planning a holiday meal,” AFBF economist Bernt Nelson said in a statement.
For those who aren’t fans of turkey, a 4-pound boneless ham will set consumers back $14.79, down $3.23 compared with last year.
Mashed potatoes are the second most popular Thanksgiving side. The price of russet potatoes, which gives the desired fluffy texture, fell nearly $1 to $2.63 per five-pound bag. The third most popular side is sweet potatoes and three pounds will cost $2.93 this year, saving buyers more than $1 over last year.
Campbell’s says green bean casserole is the fourth most popular holiday side. A pound of green beans is down $0.16 in 2024, but cooks will still need to add cream of mushroom soup and crispy fried onions to complete a casserole.
Pumpkin pie is the most popular Thanksgiving dessert, according to readers at The Pioneer Woman. Pumpkin pie mix is $4.15 for a 30-ounce package. That’s down $0.29 compared with last year.
Meanwhile, two pie shells are $3.40, only falling $0.10 since 2023. Pecan pie is the second most popular, followed by apple pie and then chocolate pie. Sweet potato pie did not make the list.
Trump 1.0’s China tariffs didn’t result in high inflation. Why 2.0 is different.
Annual consumer price inflation in October heated up a hair at 2.6%, bringing concern disinflation may have stagnated too far away from the Federal Reserve’s 2% target. In September, consumer prices rose 2.4% on an annual basis.
Bank of America economists said ahead of Wednesday’s report, “Inflation is moving sideways after a period of substantial disinflation.”
“I think people are worried that we’re not just sideways, we’re plateauing, and that we’re going to go back up,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.
While the price of goods has gone down over the past year, services inflation is driving overall consumer prices higher. That said, both categories could see inflationary pressures in 2025.
Tariffs would certainly be No. 1 on my list for what’s going to be inflationary.
Mary Lovely, senior fellow, Peterson Institute for International Economics
“A lot of President-elect Trump’s program is, in fact, expansionary. [That’s] one reason why we’re worried about inflation,” Lovely said. “If the economy is growing well, people’s incomes are rising; firms may feel more comfortable passing those [costs] along, even preemptively.”
Lovely said Trump’s deportation policy would affect the size of the labor market and wages, putting inflationary pressures on places where undocumented workers typically fill jobs. But another policy takes the top spot.
“Tariffs would certainly be No. 1 on my list for what’s going to be inflationary,” Lovely said.
Trump’s campaign has argued many things related to his tariff policies that go against this statement. He and the campaign point to his first term and China tariffs that they say didn’t contribute to inflation. He has also long argued that foreign countries, not Americans, bear the cost of tariffs.
President Trump can come in and have a pretty clear runway to put tariffs on China. The 10% across the board is a much harder thing.
Mary Lovely, senior fellow, Peterson Institute for International Economics
In Trump 2.0, the president-elect has proposed 60% tariffs on China and 10%-20% across-the-board tariffs on other trade partners.
For a closer look at the impact of these proposals and why a second trade war may play out differently than Trump’s first term, Straight Arrow News interviewed Lovely, an expert on U.S.-China trade relations.
The following transcript has been edited for length and clarity. Watch the interview in the video above.
Mary Lovely: My research focuses on U.S.-China trade flows and trade relations and also on the Chinese economy. Obviously, with this being an election year, I’ve done a lot of work on tariffs and what they might mean for consumer prices, for who pays the tax burden, especially as President-elect Trump has talked about replacing some of the income tax with tariff revenue.
Simone Del Rosario: And Trump has proposed a lot of tax cuts. Several things on his proposal list are, in nature, inflationary. Tax cuts, increased spending in the private sector, and then, of course, tariffs,
Mary Lovely: Yes, of course. Tariffs would certainly be No. 1 on my list for what’s going to be inflationary. He’s promising them at high rates, so on China, 60%, and we can talk about which goods and services is that really going to affect. And he’s promised them quickly, so we may see them as early as Q2 of next year. People know that’s coming, and that will be built into expectations for prices and rates.
Simone Del Rosario: Would you expect companies to be raising prices ahead of President-elect Trump even going into office?
Mary Lovely: I think that companies want to raise prices when they feel consumers are able to accept them. So it may be when they’re bringing out a new model, or when they’re just refreshing their price list for customers, if they’re dealing with industrial customers or if they think the economy is moving ahead really well. And we may see the economy growing a little bit faster – it’s already doing really well – but a lot of President-elect Trump’s program is, in fact, expansionary; one reason why we’re worried about inflation. And so if the economy is growing well, people’s incomes are rising, firms may feel more comfortable passing those along, even preemptively.
Simone Del Rosario: We know that President-elect Trump is promising big tariffs. This has been a cornerstone of his economic policy. I’ve talked to a lot of economists on all sides of the aisle, and some people are saying, ‘Well, I think he’ll end up doing something more targeted.’ Based on what he’s told us, he wants across-the-board tariffs, and he wants really high tariffs on China and perhaps Mexico as well. That said, what are you expecting the tariff landscape to be like? Do you expect it to be as high as his campaign promises? Do you expect there to be a little bit of moderation in what happens? What are you expecting?
Mary Lovely: This is a great question, Simone, and I think we’re all trying to look into the crystal ball and make some guesses here, right? Because there’s a lot of factors that will go into what he actually does. A lot of people also say he’s a dealmaker, so we may see him threatening these tariffs but not actually carrying them out. Given the people that he’s beginning to appoint and reports [of Trump wanting Robert Lighthizer to be his trade czar], who was his trade representative in the first term, we expect tariffs will be right at the top of the menu.
Regarding the tariffs on China, where former President Trump, as candidate Trump, promised a flat 60, I expect we’ll see action quite quickly, and that is because he’ll tack these on to the original Section 301 case against China. That was the legal authority that gave him the power to put those tariffs on starting back in 2018. Some folks may remember a couple of months ago, President Biden put 100% tariffs on Chinese EV imports, and that was done under the same authority, even though EVs had nothing to do with the original 301 case.
So President Trump can come in and have a pretty clear runway to put tariffs on China. The 10% across the board is a much harder thing. He is likely to have control of both houses in Congress. Congress ultimately has the power to tax. He may have to get authority from Congress to do that. It is quite unusual for us to start raising tariffs across the board on allies like Great Britain, Japan and South Korea. It’s a whole different kettle of fish.
Simone Del Rosario: Let’s focus on the China aspect for a little bit. We’ve heard from Trump’s campaign that these tariffs are not going to raise inflation. They point to his first term and say, ‘Look, we already did this. We already put tariffs on China. You all said it was going to raise inflation and it didn’t.’ So should we believe that?
Mary Lovely: No. That was an easy question.
Simone Del Rosario: And why is this different?
Mary Lovely: Basically what we do is we look at the prices of things when they come across the border, and we say, ‘Are these higher? Are they higher by the amount of the tariff?’ And the answer is, the price that we paid the foreign exporter, i.e. the Chinese manufacturer, didn’t change, and then we paid the tax. So the answer is, every study found that the importer paid 100% of the new tax.
Now was all of that passed through to the final consumer? Well, that’s a long road, because a lot of these products that we get from China are inputs, things that manufacturers use, so something like a small electric motor that’s then used in a a metal fishing boat, for example, little boat you might take out with your dad or your granddad to fish. That boat has content in it that comes from China, and we all know that, and those prices go up, and then it gets reflected in the alternate price. So we have to track it through that complicated route. Even goods that come across the border seem simple. They’re going to go on the shelf in Target or WalMart, but then we get retailing costs on top.
Some of that was passed through right away to consumers, and some wasn’t. Companies have to decide, ‘Do I take a little bit of profit, don’t turn away my customers, make sure they keep coming to my store, or do I pass it all through now because I really don’t have the ability to bear it myself?’ And what we saw was it was partial pass through to consumers, but that whole process was really shortcut by the pandemic.
So what will happen in the long run is – we don’t have good information from the Trump One tariffs, butwe do know that those costs were paid by Americans somewhere along the value chain. So I think that saying that it’s foreigners who pay it is just simply not supported by any evidence. It’s sort of wishful thinking.
There’s another part to this, which I think may be less well appreciated by folks, which is that not only is most of what we get from China used by U.S. manufacturers, and the higher costs hurt them, and we have documented evidence that it led to layoffs in companies that used a lot or a decrease in employment in a lot of places that used a lot of these inputs, but a lot of the bundle is electronics and things like laptops, cellphones, game systems, your Apple Watch, and these were not taxed at all. So if he’s talking about a flat 60%, it’s going to go on these consumer electronics. And it’s going to be huge. Some things are already taxed at 25, you’re going to see it’s an incremental tax. It’s going to be a huge tax. And so that makes me think that maybe he might back off a bit, or do it in stages.
Simone Del Rosario: We are already hearing companies look to this new reality and see how to move forward. AutoZone’s CEO told analysts they’d raise the prices ahead of tariffs. Other companies are saying, ‘We’ll wait for the policy, but yes, then we’re still going to have to raise prices.’ Steve Madden said that they were going to cut the amount of goods they were importing from China and rely more heavily on different partners. Part of tariff policy is adjusting trade relationships. So do you think that these Trump tariffs will, in turn, bring manufacturing back to the United States or take it away from China?
Mary Lovely: Well, I think it will take it away from China. We did see a decrease in the U.S. purchases of goods that were taxed. That makes sense, right? You put a tax on one store, you go to another store, but we saw most of that stuff move to other countries and we had to pay higher prices for it, because they’re just not as good at making it or they had to create a factory out of nothing. So it went to Vietnam. It went to Thailand. Very little of it came back to the United States. And that’s because you think about the products that are being made: Do you think that you can make a table cloth, T-shirts, in the U.S. and pay a living us wage and still compete with something from Bangladesh or Vietnam? The answer is no, you can’t.
So we are going to see higher prices, we’re not going to see a lot of jobs. Now, if he goes to 60%, some companies will come back, absolutely, or we’ll get foreign investment in the United States. And that’s another reason why we might see higher inflation, because we’re going to see some foreign investment in the United States.
People will say that’s the tariffs creating jobs, yes, but it’s going to be at much higher prices, which means that you won’t be able to buy something else. That’s the part that I think is more difficult to grasp, the idea that if I have to spend a lot more buying apparel, buying clothes for my kids, well then I can’t spend it at the grocery store. I can’t spend it on local services like eating out. And we’ve traced through that and on net, the tariffs are job losers. There’s just no way around the evidence.
Now people are okay with that, because, as you mentioned, part of the idea is to move supply chains away and reduce our dependence on China. It’s true, it’s an important goal, but it’s going to be costly, and we shouldn’t pretend that it’s all sunshine, it’s going to be lower prices and more jobs, because it just doesn’t make sense economically, that that’s how it will happen.
Simone Del Rosario: And would China retaliate? What would that look like and how would that affect us?
Mary Lovely: Well, if China retaliates, obviously it’s going to make it harder for U.S. companies to sell abroad, and the U.S. is the second largest manufactured good exporter in the world. We haven’t talked a lot in this election about how we are actually an export superpower, so that will make it harder for U.S. companies. How China retaliates is really hard to guess. Last time they did a bit of tit for tat, and we may see that. I think if President Trump goes ahead with tariffs, broad based, 10%, 20%, on our friends and allies included, we will see swifter retaliation.
Everyone has been calling President Trump, polishing up their golf games, trying to make nice, hoping that this doesn’t come. And I think we’ll see an awful lot of diplomatic activity before that. But in the end, if we do go through and actually levy those tariffs, I think we will see retaliation. We’ll have to, because these countries can’t let the U.S. do this without making it clear that they protest.
Simone Del Rosario: Given everything you’ve laid out, I’m hearing very clearly that prices are going to be going up. Should the Fed be moving accordingly and stop cutting its rate in anticipation that there are going to be inflationary pressures coming? Because multiple parts of his policies suggest that.
Mary Lovely: Even if they do cut, we’re likely to see rate increases in 2025. Lots of the Trump program, the tax cuts, as I mentioned, more foreign investment into the United States, the deportations, which will hurt on the supply side, all point in one direction, which is higher inflation.
Inflation cools for sixth month in September but food and shelter stay hot
Consumer price inflation cooled for the sixth straight month in September 2024, coming in at 2.4% annually. Monthly prices rose 0.2% from August, according to data released by the Bureau of Labor Statistics Thursday, Oct. 10.
Core inflation, which removes more volatile food and energy prices, rose 3.3% annually and 0.3% compared to August. September’s report came in just a tick higher than expectations for the month.
Shelter, which has been the main driver of core inflation, went up 0.2% compared to August but is still up 4.9% year-over-year. Annual shelter inflation fell from 5.2% in August. Shelter price increases are still responsible for 65% of the yearly rise in core prices.
Together, shelter and food account for 75% of all inflation for the month.
The energy index fell 6.8% on an annual basis and 1.9% compared to August. That drop was driven by energy commodity prices, which are down 15.3% annually.
The price of new vehicles fell 1.3% while used vehicles fell 5.1% annually. Vehicle inflation was a major driver of inflation in recent years.
September’s inflation report will further inform the Federal Reserve’s next move in November after lowering its benchmark interest rate by 50 bps in September.
Analysts expect the central bank will make an additional 25 bps cut at the November Federal Open Market Committee meeting, which starts the day after the election.
The U.S. economy added far more jobs than anticipated in September and the unemployment rate ticked down to 4.1%. The U.S. added 254,000 jobs in September when economists expected around 150,000. In August, preliminary data showed 142,000 jobs added and 4.2% unemployment.