Inflation Falls by Half

Donald Trump just cut monthly inflation in half. Including eggs, down 30% and now below where they were on Biden's last day.

So much for media's doom-loop how tariffs will give us the hyperinflations.

Trump’s First Inflation Report

Yesterday, the Bureau of Labor Statistics came out with Trump's very first inflation report card, saying CPI rose just 2.4% annualized on the month.

That's way down from Joe Biden's last inflation read of 5.7% annualized.

So 3 and a half points in 28 days.

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The new numbers took year-on-year CPI down to 2.8%.

A stone's throw from the pre-Covid 2.5%.

Inflation was lower than markets expected on both CPI and “Core” CPI which excludes food and energy and is considered the more reliable one for underlying inflation.

In fact, year-on-year core is now the lowest since April of 2021, before the Bidenflation nightmare began.

Which Prices are Moving

Digging in, the biggest jump was housing. Which is up 4% annualized, making up a third of all inflation. This was offset by falling energy prices -- gasoline was down 13% annualized on the month.

And an absolute plunge in airfares, down 4% on the month -- 50% annualized.

Plunging airfares are a classic recession flag -- people stop taking vacations, companies make you do Zoom.

But hotel prices are holding up so that might be more about cheap jet fuel thanks to drill baby drill.

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Interestingly, new car prices fell while used rose. Interesting because tariffs were supposed to increase new car prices. While deportations should be lowering used cars -- lots of extra cars for sale.

That could be Americans down-grading to used. Which is also ominous.

The other big one -- food inflation -- dropped by half, from annualized 5% to 2 and a half. That's despite soaring egg prices -- the CPI is on a lag so it didn't count the recent plunge in eggs.

In short, goods inflation -- stuff you can drop on your foot -- is basically zero.

What's left is services inflation, which is falling fast.

What’s Next

If DOGE manages to slash federal spending Bidenflation is done.

Toss in Trump's energy policies, which have already dropped oil prices by 15%. Plus cutting red tape and, of course, cheap eggs -- and we could get inflation back to the 2% Americans know and love.

I've mentioned in previous articles (here and also here) how tariffs get the headlines, but government spending and money supply are the 800 pound gorillas of inflation.

If DOGE cuts stick -- as in if Congress doesn't just re-spend them somewhere else -- we'll get ongoing drops in inflation as household dollars no longer have to compete with migrant welfare and, yes, transgender operas.

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Meanwhile, the Fed is actually helping for once.

Perhaps because Jerome hates Trump and is no longer doing favors for the White House.

The Fed’s kept interest rates high, which reduces bank lending that normally pyraminds on the Fed's money-printing.

Meanwhile, the Fed’s ongoing sell-offs of their $6 trillion pile of assets literally cancels the dollars the Fed printed during the pandemic:

We may yet see price jumps in specific imports as reciprocal tariffs kick in.

But in the areas that matter Trump's doing the right things on inflation — spending restraint, regulatory restraint, expansion in energy and small business.

So far, it’s paying off much faster — and much bigger — than even I would have predicted.

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