President Donald Trump addresses rally at Mt Airy Lodge in Pocono, Pennsylvania on December 9, 2025
It seems he is facing the same problem when it comes to inflation and prices. He promised to bring prices down on the first day of his presidency. While inflation had been falling to the Fed’s 2.0 percent inflation target before Trump was elected, it is now close to 3.0 % and looks to be heading higher, and that was even before the impact of his war against Iran.
We got the latest news on this front yesterday when the Bureau of Labor Statistics released February data on import prices. Non-fuel import prices rose by 1.1 percent in the month. Import prices are erratic on a monthly basis, but this followed a 0.8% rise in January. Year-over-year non-fuel import prices are up 2.5 percent.
Prices of all imports excluding fuels since April 2023Source: US Bureau of Labor Statistics via FRED
There are two important issues to keep in mind when thinking about the impact this will have on the inflation households see. The first is that this index tracks prices before any tariffs are imposed. These are the prices charged when goods come off the boat. Trump’s tariffs are added onto these prices.
If exporters were eating the tariffs, as Trump promised us, then import prices would be falling. That is clearly not what we are seeing.
The other important item to note is that these data are for February. That is before the war on Iran sent the price of oil, natural gas, and many other commodities soaring. As bad as the February data look, March is virtually certain to be worse.
This reinforces the story we saw with the February Producer Price Index (PPI). The core PPI rose 0.5 percent in February and is up 3.5 percent over the last year. The relationship between inflation at the wholesale level (the PPI) and the retail level (the CPI) is not one-to-one, but it’s a safe bet that if we see higher inflation at the wholesale level, it will be coming out of consumers’ pocketbooks down the road.
The pickup in inflation is not a surprise; it is a completely predictable result of Trump policies of tariffs, mass deportations, and ad hoc dictates to private corporations (e.g., shutting down windfarms). It is not a story of hyperinflation, as some doomsayers may have forecast, but it is a story of higher inflation that eats into consumers’ purchasing power. That’s what you get when you turn the keys of government over to a confused old man.
Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.
Reprinted with permission from Dean Baker.
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