The inflation that the United States experienced during the mandate of Joe Biden was one of the main themes of the electoral campaign in the United States. Donald Trump has repeatedly repeated that he was going to lower prices, particularly in food, which pushed many voters to vote for him. But today, the president-elect who will take up residence in the White House in January 2025 seems a little less peremptory.
“I would like to lower them. It's hard to bring things down once they've gone up. You know, it’s very difficult,” he said in an interview Thursday with Time, which named him Person of the Year 2024.
Obviously, the president-elect placed blame on the Biden administration for how it handled inflation that led to rising food prices.
According to him, two levers will be activated to lower prices: lowering the price of energy and improving the supply chain. “I think they will. I think the energy will bring them down. I think a better supply chain will bring them down. You know, the supply chain is still broken. She is failing,” he said.
Inflation on the rise again
Incidentally, Donald Trump promised to further increase American energy production while it has already reached unprecedented heights. On the other hand, radio silence on supply chains. He preferred to complain about the incentive measures taken by the Biden administration in favor of electric vehicles.
The fact remains that the Trump equation will become more and more complex to solve. Inflation accelerated again in November in the United States, for the second month in a row. Consumer prices increased by 2.7% year-on-year in November, compared to 2.6% in October, according to the CPI index published by the Department of Labor, and on which pensions are indexed.
VideoDonald Trump named “Person of the Year 2024” by Time magazine
And fears are growing that the curve will remain on this trajectory, complicating the task of the American Central Bank, the Fed, which meets on December 18. With this rebound in prices, Fed officials will have to decide whether or not to cut rates again, for the third time in a row, or whether to take a break. For now, market participants expect a quarter-point rate cut.
But this decline risks further fueling inflation. Conversely, if the Fed decided to increase rates this would imply less pressure on inflation due to the increase in the cost of credit for households and businesses but with the risk of increasing the unemployment rate with a less economic activity. However, in November in the United States, the unemployment rate was already high at 4.2% of the working population.
Customs duties will complicate his task
Trump's coming to power still risks putting obstacles in the way of lowering prices. By putting forward a protectionist policy with customs increases on imported products, this could quickly lead to an increase in certain products on the shelves, such as alcohol or spirits.
More broadly, experts say, Trump's tariff proposals risk exacerbating supply chain difficulties contrary to what he claims. During his first term, container shipping market rates soared by more than 70% in 2018 after the announcement of new customs tariffs. Increases which could be directly passed on to consumers.
