The most severe inflation in the United States in years is once again eroding Americans’ incomes, with rising gasoline and grocery prices threatening household spending.
The latest government data released on Tuesday shows that the war in Iran is intensifying inflation, adding to the woes of consumers who are already struggling with high living costs. After adjusting for price increases, wages in April fell year-on-year, marking the first decline since 2023.
This week, President Donald Trump unveiled a series of new plans to lower prices. Both the Republican and Democratic parties are competing to win votes for the upcoming US midterm elections, trying to convince voters that they can reduce the cost of daily living. But with family budgets once again under pressure, it seems that the pessimism of the American people about the economy is unlikely to subside in the short term.
“We need to fill up the car to get to work and take the kids to school. We also need to eat. These are not expenses that families can avoid or put off,” said Sarah House, a senior economist at Wells Fargo. “This is really putting a lot of pressure on many American families.”
The consumer price index rose by 3.8% year-on-year, marking the biggest increase since 2023. According to the American Automobile Association, gasoline prices have risen by approximately 50% since the outbreak of the war. Additionally, the latest report from the Bureau of Labor Statistics also indicates that prices for air tickets, housing, clothing and food have all gone up.
Food and grocery prices rose in April by the most since 2022, when overall inflation also climbed to its highest level in decades. Due to the U.S. cattle herd remaining at its lowest level in 75 years, the price of beef broke through $7 per pound for the first time, and coffee prices also hit a new high. The prices of fresh fruits and vegetables, milk and bread also all increased.
One of the reasons for Trump’s election was the public’s dissatisfaction with high prices in the United States, but he mainly focused his energy on foreign wars and the renovation of the White House. Democrats are now vigorously promoting the issue of “affordable prices”, accusing Trump of not fulfilling his 2024 campaign promises.
Some of the proposals Trump has put forward recently include temporarily suspending the federal gasoline tax. He was also expected to sign executive orders aimed at lowering beef prices, but these orders were later postponed. Additionally, he has urged Congress to pass housing legislation to “ensure that housing is built for people, not for businesses.”
Republican strategist Alex Conant said the White House must show that they are concerned about this issue. He believes that “the cost of living is the top concern for voters, and it should also be Trump’s top concern.”
However, it remains unclear how quickly these measures will be implemented and what actual benefits the American people will gain from them. Jeff Horwitz, a Democratic pollster at Hart Research, said that this move may not have a significant impact on voters’ opinions.
He said, “Even the fuel tax holiday just shows that you’ve made the situation worse. It doesn’t change the bigger problem.”
To cope with the constantly rising cost of living, Americans have reduced their savings and increased borrowing. Tax refunds have alleviated the impact of rising prices to some extent, but business executives say that low-income customers have begun to cut back on spending. The consumer confidence index has dropped to a record low. Even among Republicans, the University of Michigan’s consumer confidence index has fallen to its lowest level since Trump’s second term.
Another report on household debt released by the Federal Reserve Bank of New York on Tuesday showed that many households were still under debt pressure in the first quarter. The proportion of auto loans overdue by at least 90 days hit a record high, while the delinquency rate for credit card loans also rose to the highest level since 2011.
