High Prices Making Working Families Sweat This Summer Thanks to Trump’s Tariff Chaos and War in Iran
High Prices Making Working Families Sweat This Summer Thanks to Trump’s Tariff Chaos and War in Iran
High temperatures and higher prices rob working families of a restful summer break
Today’s Consumer Price Index (CPI) report shows prices surged 4.2% over the past year in May, the fastest pace since April 2023. The inflationary consequences of Trump’s war in Iran and his chaotic tariffs are continuing to spread through the economy, driving up prices far beyond the gas pump. Families are increasingly weighed down by rising prices, from groceries to everyday household purchases, forcing many to reduce the amount they save to cover the basic necessities or to forgo spending on some essentials altogether.
Groundwork’s Chief of Policy and Advocacy, Alex Jacquez, released the following statement:
“High prices are here to stay. This month’s CPI print offers no relief to working families, who are being forced to pinch pennies and tighten belts in Trump’s economy. Working Americans no longer have any breathing room in their budgets and are dipping into their savings while the president spends millions in taxpayer funds to attend the NBA Finals. Trump’s betrayal of the working class has done lasting damage to our economy.”
BACKGROUND
The energy shock from Trump’s war in Iran is a major driver of inflation.
- Energy prices continued to accelerate in May, rising 3.9% over the past month and 23.5% over the past year. Energy alone accounted for nearly 60% of the May increase in headline inflation.
- Working families continue to feel the pain at the pump. The national average has climbed from just under $3 per gallon before the conflict to over $4.15 today, a roughly 40% price jump since the war began.
- The rise in diesel prices is causing broader price pains for families. Diesel prices have climbed to $5.31 per gallon, just 51 cents shy of record levels in June 2022. Diesel moves nearly everything we buy, so its price spike gets baked into the prices of groceries and other store shelf items. Tomorrow’s Producer Price Index (PPI) report is expected to reveal how rising diesel costs are increasing business expenses across the economy, a warning sign for future consumer price hikes.
- Jet fuel price hikes are making air travel more expensive. Airfares were up 2.7% in May and have increased 26.7% in the past year. Jet fuel stands at $3.29 per gallon, a 33.5% jump since the war began.
- Working families also are facing an energy shock in electricity, up 5.9% over the year. With a brutal summer on the horizon, it’s costing families more to blast their A/C not only in their cars, but in their homes, too.
Trump’s war is following families from the gas pump to the grocery aisle.
- Higher diesel and fertilizer costs from Trump’s war are working their way through the food supply chain, leading to price hikes at the grocery store. Grocery prices are up 2.7% over the past year, and the family essentials are rising fast: lettuce rose 16.4% in the past month alone, and prices for flour and fresh rolls and biscuits increased 2.6% and 4.7%, respectively. Over the past year the price of tomatoes surged 32%, beef 12.9%, and fresh vegetables 11.9%.
- Businesses warned that these higher costs could continue pushing grocery prices higher through the summer and fall, according to the Federal Reserve’s Beige Book.
Households continue to be crushed by rising prices due to Trump’s chaotic tariffs.
- Prices for tariff-exposed items are up. Prices for major appliances rose by 2.1% in the past month alone, and over the past year, the price for cookware climbed 14.6%, dishes and flatware 13.5%, photography equipment 7%, tools and hardware supplies 4.9%, and apparel 4.9%.
Higher prices are leaving families with less to show for their hard work.
- Average hourly earnings increased by just 0.3% in May, while prices rose 0.5% over the month, wiping away what little gains workers saw in their paychecks. Shelter, one of the biggest drivers of inflation, is up 3.4% over the past year, a huge fixed cost that has made families more vulnerable to the energy shock.
- The Beige Book reported growing financial strain among low- and middle-income households. Businesses noted that middle-income consumers are becoming more cautious about discretionary purchases, while lower-income households are relying more on credit cards and limiting spending to necessities.
- The Federal Reserve Bank of New York’s Survey of Consumer Expectations found that 43% of Americans said they were worse off financially in May than they were a year earlier, the highest share in four years.
- As the cost of living rises, families are finding it harder to save. The Personal Consumption Expenditures (PCE) report found that the personal saving rate dropped to 2.6% in April, its lowest level since 2022.
