President Trump said inflation was “defeated.” Some economists disagree

In the fight against affordability, President Donald Trump claimed victory over inflation.

President Trump said in a speech in Davos, Switzerland, on Wednesday that the United States has “conquered” inflation and kept consumer prices in check over the past year.

President Trump said in a speech to world leaders at the World Economic Forum that the United States has “virtually no inflation.”

“Food prices, energy prices, airfares, mortgage rates, rent, car payments are all going down, and they’re going down fast,” Trump said in a wide-ranging speech, adding: “We’ve done a hell of a job in 12 months.”

But federal data suggests some of these claims are exaggerated.

Inflation is a measure of how fast prices are rising for consumers. The US central bank, the Federal Reserve, aims for an annual inflation rate of around 2% over the long term.

The Consumer Price Index (CPI), a key measure of inflation in the United States, was at an annual rate of 2.7% in December, but economists say the rate remains high.

“To say there is ‘virtually no inflation’ in the US is factually false and a classic Trump exaggeration,” Thomas Ryan, North American economist at Capital Economics, said in an email.

Core CPI, a measure that subtracts volatile energy and food prices, “remains uncomfortably high for policymakers at 2.6%,” Ryan wrote.

Moody’s chief economist Mark Zandi also told CNBC that inflation remains “uncomfortably high.”

“Inflation is a particular problem for low- and moderate-income Americans, given high inflation for many necessities such as groceries, electricity, apparel, furniture, child care, and health care,” Zandi said in an email.

Economists said President Trump’s tariff policies ironically increased upward pressure on inflation and prevented U.S. policymakers from claiming victory.

Customs duties are taxes on U.S. imports that are paid by the U.S.-based person or entity that imports the product.

The average effective tariff rate in the United States is 17.5%, the highest since 1932, according to the Yale Budget Institute. The analysis includes President Trump’s Feb. 1 threat to impose 10% tariffs on eight European allies if the United States did not give them control of Greenland. Without considering Greenland-related duties, the effective tax rate is 16.9%.

The effective tariff rate at the beginning of 2025 was about 2%, economists said.

Economists say so far companies have not passed on the cost of tariffs to consumers as much as expected.

But based on current tariff rates, the average consumer will pay an additional $1,300 to $1,700 in 2026 compared to what they paid before Trump took office in 2025, said John Riccio, associate director of policy analysis at the Yale Institute for Budget Studies.

Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics, said in an email that while inflation is still above the Fed’s 2% target, it is “getting pretty close.”

“Most economists think the goal was met, excluding tariffs,” he wrote.

As for the day-to-day expenses Trump cited, some are lower than they were 12 months ago, but not across the board.

Here’s a breakdown of grocery prices, energy prices, airfare, mortgage interest, rent, and car payments over the past year.

Mortgage rates, which typically track long-term Treasury rates, are significantly lower than they were a year ago, thanks in part to President Trump’s push to have Fannie Mae and Freddie Mac buy $200 billion in mortgage bonds. The average interest rate on a 30-year fixed-rate mortgage briefly fell below 6% earlier this month, just after President Trump announced his plan.

“This appears to be due to the president’s order to Fannie and Freddie to buy $200 billion in mortgage bonds,” Justin Begley, an economist at Moody’s Analytics, said in an email.

The average interest rate on a 30-year fixed-rate mortgage was 6.21% as of Tuesday, down from more than 7% in January 2025, according to Mortgage News Daily.

“This difference equates to about $1,800 less per year in payments on a $300,000 loan and tens of thousands of dollars less in interest over the life of the loan,” said Stephen Cates, a certified financial planner and financial analyst at Bankrate.

However, most people have fixed-rate mortgages, so their interest rate won’t change unless you refinance or sell your current home and buy another property.

Rent payments are also on the decline.

The national rent index fell 0.8% in December, ending the year with a decline for the fifth straight month, according to the monthly report from real estate data site Apartment List.

The report said this was broadly in line with winter rent trends, but was the largest winter decline since 2022. Nationwide rents fell by 1.3% from the previous year. The national median monthly rent is currently $1,356.

Bankrate’s Kates said that in some parts of the country, “a surge in new apartment construction is driving down rental prices.” “While rental markets tend to respond more directly to supply and demand, house prices are more sensitive to mortgage rates than price levels alone,” he said.

Meanwhile, car payments are rising.

Even though interest rates on new car loans have fallen slightly, car buyers are still lending a lot of money.

The average monthly payment for a new car hit a record high in the fourth quarter of 2025, reaching $772 from $754 at the end of 2024, Edmunds said.

The percentage of new car buyers with monthly payments of $1,000 or more also hit a record high, and the average new car loan amount hit a new high of $43,759, Edmunds said.

“The record numbers we are seeing reflect the financial strain many buyers faced throughout the year,” Ivan Drury, director of insights at Edmunds, said in a statement.

As of Jan. 19, the average price of a gallon of regular gasoline was about $2.81, according to the Energy Information Administration.

That’s a nearly 10% drop from $3.11 a gallon on Jan. 20, 2025, when President Trump took office, according to EIA data.

“Gasoline prices fluctuate in conjunction with the oil price set in the world market,” Gagnon said.

EIA reported in January that global oil prices will generally fall in 2025 as supply exceeds demand.

For example, in the first half of this year, oil prices may fall due to a slowdown in economic activity, leading to a decline in crude oil demand. The report said prices also fell amid expectations that “higher tariffs among large economies could continue to slow economic growth.”

But not all energy prices are falling.

For example, residential electricity bills are rising, in part due to the construction of energy-intensive data centers that support the growth of artificial intelligence. Electricity prices have increased nearly 7% over the past year, according to the Consumer Price Index.

Food prices rose a relatively modest 2.4% over the past year, according to CPI data.

However, the prices of various food products can fluctuate due to idiosyncratic supply and demand factors.

Airfares fell more than 3% in December compared to the same month last year, according to CPI data.

“Airfare price levels have declined since President Trump took office,” Ryan wrote.

“Lower jet fuel prices are supporting lower airfares,” he wrote. “Political-induced weakening of inbound travel demand, particularly from Canada, may also have had some impact.”

NerdWallet travel expert Sally French wrote in a recent analysis that for travelers, it may not seem like airfares are going down because the additional fees can inflate a traveler’s costs.

The CPI data does not include additional fees separate from the purchase of a basic economy seat, for example, he said.

“These low base fares typically come with additional charges in the form of ancillary fees such as baggage inspection, securing an aisle seat, securing early boarding, etc.,” she wrote. “These additional fees are not included in this data, even though they still have an impact on travel budgets.”