Trumpflation Is Here And It's All Trump's Doing

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Year-over-year inflation peaked at 9% in June of 2022. A year later, it was down to 3.1%. It was down to 2.6% by the election in November of 2024. Inflation was generally expected to continue to fall and to be at or near the Fed's 2% percent target by the end of 2025.

But then Trump turned everything around. Inflation began to rise even before he took office, as households and businesses stocked up on imported goods in anticipation of Trump tariffs.

Durable goods prices, which had been falling since early 2023, stopped falling and began to rise. The Consumer Price Index also stopped falling and started to rise. Year-over-year inflation hit 3% in September 2025 but then slowed to 2.7% by the end of the year.

It likely would have continued to slow through 2026. After all, Trump's tariffs were primarily a one-time event. If he didn't keep imposing new ones (a big“if”), it was reasonable to think that inflation would settle back down to its pre-tariff pace.

But we never got to test that theory. Trump decided to go to war with Iran at the end of February. As we all know, the stated rationale was crazy. Iran was not close to having nuclear weapons, and Trump himself had boasted about destroying the country's nuclear program in a bombing strike the prior summer.

Logic doesn't mean much to Donald Trump. He and Israel's Prime Minister Benjamin Netanyahu wanted to attack Iran, and whatever story they came up with was secondary.

Anyhow, regardless of their motives, they apparently did not expect that the Iranian government would both survive and retaliate by blocking oil from going through the Strait of Hormuz. This sent oil prices soaring, which is the biggest element in the current burst of inflation.

However, since oil is not just gas for our cars, but also diesel, which is needed for transporting just about everything, the price hikes are spreading throughout the economy.

Also, since much of the world's fertilizer production takes place in the Gulf countries, fertilizer prices are also soaring. This has had some effect on crops already but will be a much bigger deal next year.

The broad impact of Trump's war on inflation can be clearly seen in the Producer Price Index. The latest year-over-year figure was 6.3% for September. Since this is inflation at the wholesale level, it will be showing up at the consumer level in the next few months.

To be clear, the impact is not one-to-one, so this doesn't mean that consumer inflation will be rising to 6.3%, but it means that the direction of change in future months will likely be higher, not lower.