Relief at the Pump Short Lived as Trump Dismantles His Own Ceasefire
Relief at the Pump Short Lived as Trump Dismantles His Own Ceasefire
Falling gas prices are already in the rearview mirror as Trump’s ceasefire crumbles and core inflation remains high.
Today’s Consumer Price Index (CPI) report shows prices rose 3.5% over the past year in June, easing from 4.2% in May as gas prices fell last month during the short-lived ceasefire in Iran. However, this relief is already dated, as President Trump’s faltering ceasefire officially ended over the past week and gas prices reversed course and have started rising again. Meanwhile, core inflation remains above target, up 2.6% over the past year. Beyond the effects of his illegal war in Iran, Trump’s chaotic tariffs continue to make everyday essentials more expensive for American families. Rather than delivering on his promise to bring prices down, he has proposed new tariffs up to 12.5% on imports from 60 countries. Without a course correction, families will continue to pay the price for the president’s mismanagement of the American economy.
Groundwork’s Chief of Policy and Advocacy, Alex Jacquez, released the following statement:
“As the White House struggles to clean up its own mess in the Middle East, high prices continue hammering Americans’ budgets at home. Gas prices have already started to rise again and last month’s inflation data is stale. Trump’s debacle in the Middle East will have lasting, layered effects on our economy for months to come. Working families struggling to make ends meet should lay blame squarely on the president.”
BACKGROUND
With the ceasefire now over, families face renewed pressure from higher energy prices.
- Energy prices fell 5.7% in June as oil prices dropped during the brief ceasefire, accounting for nearly all of the slowdown in headline inflation. However, the collapse of the ceasefire and a surge in oil prices that occurred shortly after data collection for the June CPI report concluded, which will erase progress on headline inflation.
- Families continue to pay far more at the pump than before the Iran war. Gasoline prices are 29.4% above pre-war levels, with the national average at $3.85 per gallon. AAA reports that gas prices have already reversed course and have started rising since the ceasefire collapsed. Without an end to Trump’s war, families are likely to continue to face pain at the pump. Since the Iran war began, Americans have paid $56.4 billion more for gasoline, an average of $477 per household.
- Families are paying more to keep their homes cool this summer. Electricity prices increased 4% over the past year, raising utility bills during the hottest months of the year.
Paychecks continue to struggle to keep pace with the cost of living.
- Average hourly earnings climbed 3.5% over the past year in June, while prices rose 3.5% over the past year, leaving real wages in decline or flat for the third straight month.
- The cost of living remains a significant financial burden for many households. The New York Fed’s June survey found year-ahead inflation expectations rose to 3.7%, the highest since September 2023. Also, nearly 40% of consumers said their financial situations were worse than a year ago. The University of Michigan’s Consumer Sentiment Survey found that more than half of respondents said high prices are weighing on their personal finances.
- The erosion of paychecks under Trump’s watch poses real political risks for him and his party. New research suggests purchasing power plays a bigger role in voting behavior than inflation alone. A recent analysis found that declines in real wages, rather than higher inflation by itself, were more strongly associated with shifts away from incumbent candidates.
Trump’s policies are making everyday groceries more expensive for American families.
- The renewed closure of the Strait of Hormuz threatens to drive diesel and transportation prices higher, adding to the pressure already showing up in grocery bills. Diesel-powered refrigerated trucks transport much of the country’s food, with fresh produce particularly sensitive to higher shipping costs. Those costs are passed on to shoppers, pushing grocery prices up 0.2% in June. Notable grocery essentials that increased in June include beef, up 1.2%, milk, up 2%, apples, up 1.8%, lettuce, up 6.5%, and baby food, up 1.8% this month.
- With the ceasefire in shambles, fertilizer prices are likely to remain elevated as higher natural gas prices continue to increase production costs. Higher fertilizer prices will continue to increase costs for farmers, with the largest impact on grocery prices not expected until the 2027 growing season.
- Tariffs are also increasing the price of some grocery items.
- For example, tomatoes imported from Mexico are subject to a 17% tariff, helping keep prices up 19.5% over the past year.
- Tariff-exposed goods continue to see price increases. Several everyday categories posted sharp annual increases, including dishes and flatware up 13.8%, cookware up 12.1%, sporting goods up 4.5%, and clothing up 5.1%.
- The Trump administration is proposing another sweeping tariff hike, with duties of up to 12.5% on imports from 60 countries, including many of America’s largest trading partners. The proposal risks raising prices on a wider range of everyday goods at a time when families are already struggling with affordability.
