The specter of rising inflation is once again haunting American households. While inflation cooled in 2024, recent data suggests a resurgence, leaving many feeling the pinch. Kasey McBlais, a Maine resident and single mother, exemplifies this struggle. She describes managing her household budget as a constant challenge, with everyday expenses like groceries and home maintenance significantly increasing. The cost of cleaning her chimney, for example, jumped from $200 in 2019 to $500 this year, a stark illustration of the rising cost of living.
This personal anecdote mirrors broader economic trends. The Consumer Price Index (CPI) is projected to reveal a 2.9% annualized inflation rate for August 2025, up from 2.7% in July. This upward trend is defying the Federal Reserve's target of 2% annual inflation, sparking frustration among consumers grappling with persistently high prices.
A recent CBS News poll underscores the widespread concern, revealing that two-thirds of Americans perceive rising prices and anticipate further increases. Economists have offered various explanations, with some citing the Trump administration's tariffs as a contributing factor. Erasmus Kersting, an economics professor at Villanova School of Business, notes that tariffs inevitably lead to higher prices and increased inflation.
While inflation remains below its pandemic peak, the Federal Reserve's progress in curbing it has recently stalled. The Fed's efforts are further complicated by President Trump's public pressure to lower interest rates, despite claiming that "there is no inflation!!!" This contrasts sharply with his statements in July 2024, when a similar CPI rate prompted him to pledge to end the "inflation nightmare." The White House, in response to forecasts of a CPI uptick, maintains that President Trump is fulfilling his promises, citing low core inflation rates since his administration.
The projected rise in inflation presents a complex challenge for the Federal Reserve. The central bank faces the difficult task of balancing its dual mandate – promoting full employment while maintaining price stability – as the labor market shows signs of slowing down. With the probability of a 0.25 percentage point interest rate cut at 90%, according to CME FedWatch, the Fed may prioritize boosting the economy, even at the risk of further fueling inflation. However, lower interest rates won't alleviate the immediate pressure many households face from elevated prices on essential goods and services. Financial experts warn that budget constraints remain significant for many, even with the recent moderation of inflation. The feeling of escalating prices, they argue, lingers as a painful reminder of recent economic instability.
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Originally published at: https://www.cbsnews.com/news/cpi-report-august-2025-inflation-prices-economy-trump-tariffs/
