August CPI Report Shows Price Hikes Accelerating as Trump Brushes Off Working Families’ Affordability Worries
August CPI Report Shows Price Hikes Accelerating as Trump Brushes Off Working Families’ Affordability Worries
Paychecks no longer cover the basics as Trump drives up prices on gas, groceries
Today’s Consumer Price Index (CPI) report shows prices rose 0.4% in August and are up 3.4% over the past year. Core prices, which exclude food and energy, rose 0.3% in August alone. Gas prices reached their highest ever recorded for August, and the pressure has not let up, climbing $4.29 per gallon, up 14 cents since hitting a Labor Day record. Diesel surged past $6 per gallon for the first time ever, up more than 70 cents from a month ago, which will show up on grocery store shelves for months to come as it costs more and more to transport essentials.
Rather than address the pain families are feeling at the grocery store and the gas pump, Trump this week floated an absurd rebate program, promising checks sent directly to Americans if his party is successful in the midterm elections – after promising 15 similar payments that never materialized during his second term. Under Trump’s watch, wage growth has slowed to its lowest point since 2021, while inflation has shot up and shows no signs of easing. Every day in Trump’s economy is more expensive than the last for working families.
Today’s report is the final inflation print before the Federal Reserve meets next week to decide where interest rates go next, and it’s already out of date. Most of the August data was collected before Trump’s 50% tariffs on Canadian imports took effect on August 22, hitting products including wine, furniture, and dairy products, and before Trump further escalated his war in Iran and sent oil prices past $100 per barrel.
Groundwork’s Senior Vice President of Policy, Advocacy, and Research Alex Jacquez, released the following statement:
“Trump’s economy is setting all the wrong kinds of records. Working families are being forced to use credit cards to cover the basics as gas prices hit historic highs. Meanwhile, the president has imposed further tariffs on one of our closest trading partners and continues escalation in Iran. Trump promised to lower costs and improve daily life for Americans. He’s not only failed to deliver on that promise, he’s driven our economy over a cliff.”
BACKGROUND
Trump’s war in Iran is still raising energy prices – and setting record-high prices.
Grocery bills continue to weigh on family budgets.
- Higher diesel and truck freight rates are raising prices on the grocery shelves. Grocery prices are up 2.2% over the past year, with staples like ground beef up 7.2%, milk 4.1%, bread 3.8%, and fresh fruits and vegetables 3.1% from a year ago. Several grocery staples saw substantial price spikes in August alone: eggs up 2.9%, cheese 0.7%, chicken 0.4%, and deli meat 0.3%.
- The Federal Reserve’s August Beige Book captured just how expensive groceries have become. Diners in the New York District said “it’s now cheaper to eat out than to purchase groceries for home-cooked meals.”
- Food companies are raising prices even as consumers pull back. Campbell’s raised prices an average of 4% to 5% across roughly 60% of its products in the second quarter. Its CFO told investors that the higher prices would reduce sales volumes but still have a “nice impact on the bottom line.”
Trump’s higher costs are outrunning workers’ paychecks.
- Paychecks are falling behind prices. Average hourly earnings increased 3.1% over the past year in August, the slowest wage growth since 2021, compared with a 3.4% rise in consumer prices. Wages rose just 0.3% in August while prices rose 0.4%.
- Consumers are bracing for weaker finances and less spending. In August, 13.8% of consumers said they expect their incomes to decline, up from 12.6% in July, according to the Conference Board’s Consumer Confidence Survey. A growing share of consumers described their finances as “bad” and plan to cut discretionary spending, including on travel and entertainment.
Trump won’t let up on his chaotic tariff policies, and consumers are paying the price.
- Prices keep climbing for goods heavily exposed to tariffs. Prices have climbed 9.8% for dishes and flatware, 8.4% for computers, 5.3% for sporting goods, and 4.6% for cookware,
- The next round of consumer price pressure is already building upstream. Yesterday’s Producer Price Index (PPI) report showed that businesses are still paying more for tariff-exposed goods. Businesses paid 23% more for steel mill products than a year ago, 13% more for industrial chemicals, and wholesale prices, excluding food and energy, are up 4.6%. These costs will land on store shelves in the months ahead.
- The latest U.S. tariffs on Canadian goods are only partially reflected in today’s inflation data. The 50% tariffs took effect on August 22, late in the data collection period, hitting Canadian imports including alcohol, furniture, and electronics. Since then, Canada has retaliated with tariffs on $20 billion of U.S. goods, further escalating the trade dispute.
- Companies are already preparing to pass higher tariff costs on to consumers. On a recent earnings call, Bath & Body Works interim CFO Tom Javitch said the company is exploring ways to offset Canada-related tariffs through changes to “sourcing, assortment and pricing.”
