• Former President Donald Trump claims inflation is down and the stock market is up, but recent data shows a more nuanced picture.
  • The annual inflation rate rose to 2.9% in August, its highest level since January, while core inflation held steady at 3.1%.
  • Equity markets have shown resilience in 2025, though the latest uptick in prices complicates the Federal Reserve's path forward.

Former President Donald Trump’s recent assertion that "inflation is down" and the "stock market is up" presents a simplified view of a complex economic landscape. While inflation has moderated significantly from its post-pandemic peak, the most recent government data indicates price pressures have begun to accelerate again, not decelerate.

The latest Consumer Price Index report showed the annual inflation rate climbed to 2.9% in August, up from 2.7% in July and marking the highest reading since January. On a monthly basis, the CPI increased 0.4%, driven by rises in shelter, food, and energy costs, which jumped 0.7%. Core inflation, which strips out these volatile categories, remained stubbornly high at 3.1% over the past twelve months.

A nowcast from the Cleveland Fed suggests this trend may persist, projecting September’s annual CPI at approximately 3.01%. This recent uptick challenges the narrative of a steady downward path and introduces new complications for Federal Reserve policymakers aiming to guide inflation back to their 2% target without triggering an economic downturn.

Conversely, Trump’s comment on equity performance aligns with broader market strength witnessed through much of 2025. U.S. stocks have maintained gains, supported by corporate profitability and expectations for a eventual soft landing. The resilience suggests investor confidence in the economy’s underlying fundamentals, even as they digest each new inflation print.

The conflicting signals—rising consumer prices alongside a buoyant stock market—create a delicate environment for the Fed. Officials must weigh the persistence of inflation in key service categories against the risk of overtightening policy and damaging growth. Most forecasters still expect inflation to drift lower toward the 2.3-2.4% range by 2026-2027, assuming supply-side pressures continue to abate.

Political statements often attempt to frame economic data favorably, especially during election cycles. The current reality, however, is that while the stock market's performance offers a positive signal, the inflation dynamic remains a work in progress, with recent momentum pointing in the wrong direction for consumers and policymakers alike.