US prices rose 2.7% in the year to November, according to federal data released a day after Donald Trump claimed they were falling “very fast” on his watch.
The latest consumer price index, released on Wednesday morning, was down from 3% in September, and short of economists’ expectations of about 3.1% for last month.
It comes amid questions over the strength of the US economy. The longest US federal government shutdown in history halted collection of key data. There was no inflation report for October, and data was only collected for the second half of November.
In a live TV address on Tuesday night, Trump claimed prices were falling “rapidly”, despite evidence to the contrary. “I am bringing those high prices down, and bringing them down very fast,” the US president said.
Price growth, which surged in the US to its highest level in a generation three years ago amid economic disruption wrought by Covid, fell back sharply. It has stubbornly remained above standard levels, however, and after retreating to 2.3% in April, it has since climbed higher – amid persisting concerns around affordability.
The latest rise in prices coincides with a climbing unemployment rate, which hit 4.6% in November – a four-year high. Despite this growth, the number of jobs added to the economy last month was higher than economists anticipated, rising 64,000 after 105,000 jobs were lost in October.
The White House has insisted that any inflation are remnants from the Biden administration. “I have no higher priority than making America affordable again,” Trump told his supporters at a rally in Pennsylvania last week, echoing promises he made during his presidential campaign. “They caused the high prices and we’re bringing them down.”
When inflation hit a 40-year high in June 2022, at 9.1%, many economists put it down to a combination of pandemic stimulus and recovery rippling through the economy. By summer 2024, inflation had fallen back to 3%, though Americans were still feeling the pain of high prices.
Economists widely agree that Trump’s tariffs have made prices rise. Even though the US president eventually exempted certain imports like coffee, bananas and beef from tariffs, the overall effective tariff rate is still the highest it’s been since 1938. The Yale Budget Lab estimated that, even with exemptions, Trump’s tariffs will cause prices to rise $1,700 for the average American household.
Recent polls show that Americans, still price sensitive from increases seen in 2022, are now shifting the blame onto Trump. Among other national issues listed in the YouGov/Economists poll, Trump’s net approval on prices have fallen the most compared to other issues like immigration and national security. Meanwhile, another poll from the University of Michigan’s Survey of Consumers shows that consumer expectation of inflation has soared this year since January.
The rise in both prices and unemployment has created a tricky situation for the Federal Reserve, which is tasked with trying to keep both low. The central bank reduced interest rates three times this year, but defied Trump’s demands for deeper cuts.
“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,” the Fed chair, Jerome Powell, said last week.
Fed officials have signaled that it may pause any further rate cuts as inflation and unemployment appear to be reaching a balance. Interest rates are currently sitting at a range of 3.5% to 3.75%.
Powell also noted that Fed officials will be careful about assessing economic data from November, given the impact of the shutdown. “We are going to get data, but we are going to have to look at it carefully and [with] a somewhat skeptical eye by the January meeting,” he said.
