Newly released economic data has revealed a continued rise in US consumer prices, directly contradicting claims made by President Donald Trump that costs were falling rapidly. The figures, delayed by a historic federal government shutdown, paint a picture of persistent inflationary pressure alongside a climbing jobless rate.
Contradiction Between Data and Rhetoric
The latest Consumer Price Index (CPI), released on Wednesday, showed that prices increased by 2.7% in the year to November. This figure was down from 3% in September and slightly below economist forecasts of 3.1%, but it stands in stark contrast to the President's recent assertions.
In a live television address just one day before the data's publication, Trump insisted he was bringing high prices down "very fast". "I am bringing those high prices down, and bringing them down very fast," the US President stated. However, the official statistics tell a different story, showing inflation has climbed since hitting a low of 2.3% in April this year.
Shutdown Creates Data Gap and Economic Uncertainty
The economic picture has been obscured by the longest federal government shutdown in US history, which halted the collection of key statistics. As a result, there was no inflation report for October at all, and November's data was only collected during the second half of the month.
The labour market data, also delayed, presented a mixed bag. The US economy lost 105,000 jobs in October but added 64,000 in November—a figure higher than analysts expected. Nevertheless, the unemployment rate rose to 4.6%, marking a four-year high and creating a complex challenge for policymakers.
Political Blame and Policy Impact
The White House has consistently framed any ongoing inflation as a remnant from the previous Biden administration. At a rally in Pennsylvania last week, Trump told supporters, "They caused the high prices and we're bringing them down."
However, economists widely attribute some of the price pressures to the Trump administration's own trade policies. Tariffs imposed by Trump have made prices rise, and despite exemptions for items like coffee and beef, the overall effective tariff rate is at its highest since 1938. Analysis from the Yale Budget Lab estimates these tariffs will cost the average American household an extra $1,700.
Public opinion appears to be shifting, with recent polls indicating Americans are increasingly blaming Trump for high costs. His net approval on handling prices has fallen more sharply than on issues like immigration or national security.
Federal Reserve's Delicate Balancing Act
The simultaneous rise in both prices and unemployment has placed the Federal Reserve in a difficult position. The central bank, which reduced interest rates three times this year, has resisted calls from the President for more aggressive cuts.
Fed Chair Jerome Powell emphasised the complexity last week, stating, "We are committed to 2% inflation, and we will deliver 2% inflation, but it is a complicated and difficult situation where the labor market is also under pressure." He also cautioned that officials would need to view the November data sceptically due to the shutdown's impact.
With interest rates currently in a range of 3.5% to 3.75%, Fed officials have signalled a potential pause in further cuts as they assess whether inflation and unemployment are reaching a new balance.
