A sign for customers shopping for eggs at a Trader Joe's, in Merrick, N.Y., on Feb. 10.Shannon Stapleton/Reuters
People have been asking where the resistance is in the United States as President Donald Trump runs amok.
The answer is in the inflation rate. Mr. Trump campaigned on lowering the cost of living, a ridiculous promise that he won’t keep any time soon. Inflation bows to no politician, as we can plainly see in the United States in early 2025.
The U.S. inflation rate rose by a larger than expected 3 per cent in January compared to the same month a year earlier. That’s not a catastrophic level by any means, but it’s high enough that economists expect the U.S. Federal Reserve to delay further interest rate cuts.
One aspect of U.S. inflation in particular highlights how random inflation can be. Egg prices recently hit a record high of US$4.95 as a result of an ongoing bird flu outbreak. Other drivers of U.S. inflation include shelter and energy costs, and strong consumer demand. Americans will see more inflation ahead if Mr. Trump widely applies tariffs on imports from Canada and other countries. Tariffs are taxes that generate revenue for governments and make goods more expensive to buy.
In both the United States and Canada, people remain angry about the surge in living costs that followed drastic interest rate cuts during the pandemic. Inflation is nasty because it drives up the cost of buying food and other goods. The most practical weapon against inflation is high interest rates, which inflict more pain at the household level.
Mr. Trump’s election win shows how effective it can be to harness voter anger about the cost of living. But he also reminds us that inflation can’t quickly be controlled by politicians. Remember that if living costs become an issue in the upcoming Canadian federal election.
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