CPI report indicates consumer prices 2.7% higher than a year ago: Will the Federal Reserve increase interest rates?

As Trump stares out of the window to his non-existent ballroom like a senile pensioner waiting for the postman for the third time in one day, the world around him continues to crumble. His ballroom is not there yet, despite what he sees, and just about everything else he lays his eyes on is in fact a mirror image of what his eyes report back and what his army of Smurfs whisper into his ears.

The latest US inflation figures have landed at an awkward moment for the President, exposing the growing gap between his ridiculously antiquated economic rhetoric that would be hilarious were it merely a suggestion and not practice, and the reality facing American households.

According to the December Consumer Price Index, annual inflation remains stuck at 2.7 per cent, unchanged from the previous month and still comfortably above the Federal Reserve’s target. Far from signalling a decisive victory over rising prices, the data suggests an economy struggling to fully shake off persistent cost pressures that sprout entirely from his outlandish decisions on a daily basis.

On a monthly basis, consumer prices rose by 0.3 per cent, driven by housing, food and services. These are not abstract categories but the everyday expenses that dominate household budgets for ordinary American citizens, the ones that his ICE agents are targeting on the streets. Rent, grocery bills and healthcare costs continue to climb, undermining repeated claims from Trump and his allies that inflation is effectively solved under his leadership.

The president has, in typical fashion, taken all the credit for what he portrays as economic stability, often pointing to headline figures printed on huge charts in font sizes he can see easily, all while ignoring what they actually say and ridiculing anyone for pointing out the facts.

Trump has also revived threats of sweeping tariffs as part of his economic agenda, presenting them as a tool to protect American workers when in fact all they serve to go is stoke tensions and increase prices for businesses that are passed down to consumers, something he has been warned about by experts on the matter. But this is what you get with a wannabe dictator in charge: policy driven by personality, not principles.

With inflation already refusing to fall decisively, the prospect of tariff driven price rises raises serious questions about whether the administration is willing to risk household purchasing power for political posturing. Or rather, it would raise questions, if he cared.

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Against this backdrop (and I’ve not even mentioned Jerome Powell’s ‘hostage-style’ video in which he hits out again at Trump), markets are recalibrating expectations. Prior to the CPI release, futures markets had priced in a strong chance of no action from the Fed at its upcoming meeting, with interest rates expected to remain steady rather than climb. But as ever, with the radically unstable Republican in charge, predicting anything is a fool’s game.

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