“You know what I really like? I like inflation,” said President Donald Trump on Wednesday after the consumer price index rose more than 4% for the first time in three years, stemming from the Iran war’s rise in energy prices.
“The numbers were good,” Trump said, speaking to reporters in the Oval Office, about CPI data released by the Bureau of Labor Statistics.
US households have been less sensitive and less enthusiastic about the impact of the Middle East conflict on the cost of everyday goods. The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations showed that the share of respondents who see their current situation as “worse” than last year reached a nearly four-year high.
The oil shock has put upward pressure on prices at a time when many consumers are already struggling.
The US Congress Joint Economic Committee – Minority estimates that tariffs and the war with Iran will cost each household more than $3,100 from 2025 to May of 2026.
Asked for comment, a White House spokesman sent CNBC a link to a New York Post story, in which Trump said he liked the fact that inflation was not high. “The numbers are much lower than expected,” he told the New York Post on Wednesday.
High prices for essentials like groceries and gasoline limit how far workers can stretch their paychecks, experts say.
“For most American households, they have negative real income growth; it’s hard to get around that in any way,” said certified financial planner Stephen Kates, a financial analyst at Bankrate. “A lot of the benefits have been wiped out by this inflation.”
With average hourly earnings up 3.4% from last year, according to the Bureau of Labor Statistics, wage growth is now outpacing inflation.
An annual inflation rate of 4.2% means “you’re reducing the value of assets and the income of US citizens — that’s a big problem,” said Wayne Winegarden, an economist at the Pacific Research Institute, a conservative think tank. “Minimizing that impact is a concern.”
With inflation outstripping inflation, Americans’ savings rate also recently hit its lowest level since 2022, according to data from the Bureau of Economic Analysis.
The long-term expectation is inflation
Trump also said this week that a deal with Iran could be reached in the coming days, and that the critical Strait of Hormuz would reopen “soon” after that.
Once the war is over, inflation will “drop like a rock,” Trump said on Wednesday, as the situation in the Middle East escalated. “When it’s over, you’ll see the oil go down where it’s been,” he said.
The comments come after Trump said the US would hit Iran “hard” again.
The president has made many similar statements in recent months about an imminent peace deal. The battle crossed the 100-day mark on Sunday.
But even when the US and Iran negotiate a peace deal, the effects of the war on inflation could take weeks or months to wear off, experts say.
“The pace of reopening the Strait will be critical to future cost pressures, and the effect will be passed on to consumers,” BlackRock CEO Rick Rieder said in a statement on Wednesday, referring to the vital waterway used to transport nearly a fifth of the world’s oil.
Gas prices, which have been a particular sore point since the start of the Iran war, may not ease soon, according to Bankrate’s Kates.
“You’re still looking at a big increase every year,” Kates said. As of Thursday, consumers paid a national average of $4.13 per gallon, according to AAA — up from $3.12 last year.
“The price level is what people care about, and the price levels are not going to go back up in 2025 – even if we don’t have inflation in the next few years, which is unlikely,” Kates said.
Some Federal Reserve policymakers have also expressed concern that, as the conflict continues, it could raise long-term inflation expectations.
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