Key Takeaways

  • President Trump claimed prices are "way down" and "coming down rapidly" from Biden-era levels, but the latest official inflation data show the overall price level is still rising, not falling.
  • August CPI rose 0.4% month over month and 3.4% year over year; the Fed's preferred PCE gauge also ran at 3.4% annually, with a sharp 4.4% monthly jump in gasoline prices.
  • The Federal Reserve raised its policy rate to 3.75%–4.00% in September, stating inflation "remains elevated" — a signal that policymakers do not share the president's read on price trends.

Politics vs. Prices

President Trump said over the weekend that prices are "way down" from levels under the Biden administration and are continuing to fall rapidly, blaming Democrats for elevated costs and saying Republicans are "fixing it." The post did not cite supporting economic data, and the latest official figures tell a different story.

Consumer prices accelerated in August. The consumer price index rose 0.4% for the month, up from 0.1% in July, and stood 3.4% higher than a year earlier. Core CPI, which strips out food and energy, climbed 0.3% — the largest monthly gain since April.

The Fed's preferred inflation gauge, the personal consumption expenditures index, also ran at 3.4% year over year in August. The monthly PCE increase was driven in large part by a 4.4% jump in gasoline prices as an Iran-related energy shock rippled through pump prices. Food prices were roughly flat in the latest PCE reading, but that is a far cry from the broad declines the president's remarks imply.

The distinction matters. Falling inflation means prices are rising more slowly. Actual broad-based price declines require negative monthly readings — deflation — which the data do not show. Since January 2025, overall consumer prices have climbed 4.8% through August, and grocery prices are up 3.4%, according to calculations using federal CPI data.

Fed Signals Doubt

If the White House sees rapid disinflation, the Federal Reserve does not. On September 16, the central bank raised the federal-funds target range by a quarter point to 3.75%–4.00%, saying unanimously that "inflation remains elevated" and that the move would support a return to its 2% objective. The Fed's September projections put PCE inflation at 3.7% for 2026 and 2.3% for 2027 — a baseline of gradual disinflation, not an immediate return to target.

Spending data underscore the challenge. Real consumer spending rose 0.6% in August, and current-dollar spending rose 0.9%, per the Bureau of Economic Analysis. Resilient demand can keep upward pressure on prices and complicate the Fed's path.

The September CPI report — due October 14 — will be the next major test. Until then, August stands as the latest completed reading, and it shows inflation above target rather than prices in retreat.

Tariffs and Trade Add Risk

The administration has made tariffs central to its industrial policy, arguing that import barriers encourage domestic investment. Many analysts counter that tariffs can lift input and consumer costs. The latest data showed import prices up 0.7% for the month and 7.0% annually — a potential source of future consumer inflation, though pass-through is neither immediate nor complete.

A recently enacted sanctions law gives the president broader authority to levy tariffs tied to Russian energy trade, with duties as high as 100% on targeted countries, according to Reuters. Analysts cited by the wire service warned such measures could add to oil-price and consumer-cost risks. Meanwhile, a U.S. trade court is weighing a challenge to "forced labor" tariffs of 10% to 12.5%, leaving uncertainty over the scope of the administration's trade measures.

The politics are charged ahead of the midterm elections. Democrats have hammered household cost increases since Trump returned to office; Republicans counter that prices would have risen even faster under the prior trajectory. Those arguments rely on different counterfactuals, while official measures track actual observed changes — and those measures show the general price level still climbing.

A Blackstone (BX) country chairman recently noted that regulatory stability has improved Italy's appeal to foreign investors, a reminder of how policy predictability shapes capital flows. In the U.S., the tariff landscape is anything but settled.

The Bottom Line

Trump's statement is best understood as a political characterization. The evidence through August shows inflation well below its pandemic-era peak but still above the Fed's 2% target, with prices continuing to rise — not falling rapidly. Lower-income households, which spend a larger share of budgets on food, fuel, and rent, remain the most exposed to a gasoline-driven inflation surge.

Whether September data bring relief is an open question. For now, the gap between the president's message and the numbers is wide.

Correction: An earlier version of this article misstated the month of the most recent CPI reading. It is August, not July.