Trump Asleep at the Wheel While Prices Soar, Says Groundwork’s Jacquez

Trump Asleep at the Wheel While Prices Soar, Says Groundwork’s Jacquez

Rising gas, grocery, travel prices squeeze working families heading into summer vacation

Today’s Consumer Price Index (CPI) report for April shows prices surged 3.8% over the past year, the highest annual rate increase in nearly three years, with core inflation rising by 2.8%. Despite Trump’s claims that gas prices are “way down,” prices at the pump remain around $4.50 per gallon, more than 50% higher than before the president plunged the country into war with Iran. In addition to Trump’s war driving up energy, food, and travel prices, his chaotic tariffs continue to push up prices for everyday goods like clothing and electronics, leaving working families caught in a double squeeze. That hardship is evident in consumer sentiment, which fell to an all-time low in May.

Groundwork’s Chief of Policy and Advocacy, Alex Jacquez, released the following statement:

“Trump chose to reignite inflation with his illegal and reckless war in Iran, and more than two months in, there’s no offramp in sight. Every day the war continues, prices climb higher and will stay there for months after it ends. As Americans continue to rank cost of living and inflation as their most important issues, Trump is more focused on finishing his billion-dollar ballroom than lowering prices for American families.”

BACKGROUND

• The economic fallout from Trump’s war in Iran continues to drive up energy and travel prices for American households.
  • Gasoline and broader energy prices continued rising in April, accounting for over 40% of monthly headline inflation, with gasoline up 5.4% over the month (28.4% from last year) and energy up 3.8% over the month (17.9% from last year).
  • Rising jet fuel prices also pushed airfare costs up 2.8% in April and 20.7% from last year, extending inflationary pressures into travel and transportation.
  • Lower-income households have been hit hardest, increasing gas spending by more than 12% as fuel costs consume a larger share of their household budgets.
• Inflation is squeezing working families on every front, with headline prices up 3.8% over the year and core inflation at 2.8%. Headline prices rose 0.6% in April alone and core prices rose 0.4% with shelter, energy, and tariff-exposed goods all driving inflation.
  • Trump’s government shutdown last fall left the U.S. Bureau of Labor Statistics unable to fully measure October rent, understating inflation in each CPI reading since. Today’s hot shelter print corrects this, accurately capturing the squeeze consumers have been living with as they dealt with high rent prices.
• Grocery prices continue to hit families where it hurts most. Tomatoes are up nearly 40% over the past year, coffee is up 18.5%, beef climbed 14.8%, and fresh fruits and vegetables are up 6.5%. Groceries also spiked 0.7% in April alone, including essentials like bread up 0.9%, meats up 1.3%, eggs up 1.5%, and milk up 1.6%, a sign that energy spikes from Trump’s war in Iran are spilling over to broader consumer goods items.
• Trump’s tariff agenda continues to raise prices on everyday imported goods. 
  • Since Trump’s tariffs first took effect last April, prices for tariff-sensitive imported goods have continued to climb, with toys up 3.2%, clothing up 4.2%, and photographic equipment up 8.8%. Several tariff-exposed categories spiked in April alone, including clothing up 0.6%, bedroom furniture up 0.8%, toys up 0.8%, and electronics up 0.6%, evidence that tariff costs are still passing through to consumers.
  • The courts have already ruled twice that Trump’s tariffs are illegal. The federal government began issuing the first refunds yesterday for tariffs collected under IEEPA, but consumers will likely see no relief. Companies receiving those refunds are not required to return the savings to consumers, and many have not shared plans to lower prices.
• Inflation is continuing to erode wage gains, and working families are cutting back to cover the basics. 
  • Average hourly earnings increased by just 0.2% in April, while inflation rose 0.6% over the month, and Bank of America found that after-tax wage growth for middle-income workers was just 2% over the past year and only 1% for low-income workers, both below the pace of inflation.
  • As everyday prices climb faster than paychecks, many families are pulling back spending to cover basic expenses.
    • Retail and restaurant CEOs are reporting growing pullbacks in discretionary spending as high gas prices strain household budgets. Bloomberg’s Second Measure data for April confirms a broad-based slowdown across discretionary spending categories.
    • Consumers are expected to have less money available for discretionary spending this year, according to Goldman Sachs. The firm lowered its discretionary cash flow growth forecast from 5.1% to 3.7%.