Inflation, explained. Modest, steady inflation is the norm in most advanced economies. As economies grow, incomes and spending tend to rise, causing the average cost of goods and services to increase. Central banks set monetary policy to keep those increases low and stable. The result is that just about everything gets more expensive over time. (Just ask your grandmother what she paid for eggs 50 years ago.)
Sometimes, however, economic shocks cause inflation to rise more sharply. The classic example is the 1970s, when oil embargoes and energy shortages sent prices soaring across the economy. More recently, the Covid-19 pandemic snarled global supply chains just as demand surged for everything from Pelotons to housing.
By historical standards, the bout of inflation we're in now isn't especially severe, and there are other signs the economy is doing well. But things like GDP growth and jobs numbers don’t matter that much to most consumers: They care more about whether their paychecks can keep up with rising prices — which lately is not a sure bet.
How Trump made inflation worse. Inflation was actually poised to decline when Trump took office, as it had been doing since 2022. But the president’s tariffs and his war of choice with Iran drove a renewed uptick in prices.
According to the new inflation numbers, energy prices were responsible for the bulk of last month’s increase: They rose 3.9 percent. That, in turn, is attributable to the closure of the Strait of Hormuz, a crucial passage for oil and natural gas, following US and Israeli strikes on Iran.
Businesses have also passed the cost of Trump’s tariffs on to consumers, fueling price increases over the past year. A recent report from the Dallas Federal Reserve found that, as of March, America’s core inflation rate would have been just 2.3 percent, instead of 3.2 percent, in the absence of Trump’s tariffs. It’s only risen higher since then.
“Trump could have presided over a pristine economy,” my colleague Eric Levitz wrote last month, “if he’d simply refrained from increasing import prices, reducing labor-force growth, and launching a war of choice near the aorta of the global energy market.” From your keyboard to Trump’s ears, Eric.
The politics of rising prices. You may feel like you’ve heard a lot about inflation lately — but brace yourself for even more. Trump’s recent comment that he “love[d] the inflation” will doubtlessly surface in a million Democratic ads during the midterms.
In a later interview with the New York Post, the president clarified his confounding enthusiasm: “I love the inflation numbers because…the numbers are much lower than anticipated,” he said.
It’s unclear who’s doing the “anticipating” in that sentence, however. Even before this inflation report and Trump’s tone-deaf comments, his approval ratings on the economy were at record lows. By one measure, Americans are more depressed about the economy today than they have been at any point since researchers began tracking consumer sentiment more than 70 years ago…even though the economy has been objectively worse at numerous points over that period.
Inflation is likely behind that pessimism. In a recent article, economists Jared Bernstein and Daniel Posthumus argue that most Americans have grown accustomed to steady, predictable price increases and have little tolerance for sudden spikes or dips.
The White House, for its part, says inflation will fall when the war in Iran ends. But no one, not even Trump, knows when that’ll happen.
