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Inflation trends during the Trump and Biden administrations have reflected very different economic backdrops. In Trump’s first term, inflation remained relatively subdued and generally stayed near the Federal Reserve’s 2% target, supported by stable supply chains and lower energy costs. Inflation accelerated sharply beginning in 2021 under Biden, driven by pandemic-related supply disruptions, fiscal stimulus and rising housing and energy prices. As Trump’s second term progresses, the war with Iran is emerging as a key inflation risk, largely through higher energy prices. Tariffs and immigration restrictions may also add additional pressure over time.
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Do Presidents Impact Inflation?
Presidents can influence inflation indirectly through fiscal policy, regulatory priorities and appointments to the Federal Reserve. However, they don’t control inflation outright.
The Federal Reserve plays a major role by setting interest rates and using monetary policy to manage inflation. It does this independently of the White House. However, presidential policies on taxes, spending, tariffs and immigration enforcement can affect demand, labor supply and supply chains. These factors can, in turn, influence price levels.
For example, large stimulus packages can boost consumer spending, while tariffs may increase input costs for businesses. Immigration policies that reduce the labor force may contribute to wage pressures, which can ripple through to consumer prices.
The timing of economic policy is an important factor when assessing inflation outcomes. Fiscal, tax and regulatory measures enacted by a presidential administration can take years to fully influence economic activity, meaning inflation observed today may partially reflect policies implemented under prior leadership. At the same time, the Federal Reserve conducts monetary policy based on long-term mandates, including price stability and maximum employment, rather than political timelines. These structural lags make it challenging to attribute inflation trends directly to any single administration.
Inflation is also influenced by a range of external and structural factors beyond domestic policy decisions. Global economic conditions, commodity and energy price fluctuations, as well as unexpected disruptions such as pandemics or geopolitical conflicts can all affect price levels. As a result, inflation during any presidency typically reflects a combination of past and present policy decisions, private-sector behavior and international economic forces, rather than the actions of one administration alone.
Inflation Under Trump vs. Biden
Comparing average annual inflation rates between Trump’s first term and Biden’s presidency highlights how broader economic conditions and policy choices shaped each period.
Trump’s term from 2017 to 2020 saw inflation average about 1.9%, with price growth relatively stable amid low interest rates and modest economic expansion. 1 Biden’s four years, by contrast, produced an average annual inflation rate near 5%, reflecting a sharp post-pandemic surge followed by gradual cooling as the Federal Reserve raised interest rates.
| Year | President | Average Inflation Rate |
|---|---|---|
| 2026 | Trump | 3.3% (through July) |
| 2025 | Trump | 2.6%* |
| 2024 | Biden | 2.9% |
| 2023 | Biden | 4.1% |
| 2022 | Biden | 8% |
| 2021 | Biden | 4.7% |
| 2020 | Trump | 1.2% |
| 2019 | Trump | 1.8% |
| 2018 | Trump | 2.4% |
| 2017 | Trump | 2.1% |
* Doesn’t include October 2025 data.
These averages, however, can obscure important differences in timing and volatility.
During Trump’s first term, inflation generally moved within a relatively narrow band until the onset of the COVID-19 pandemic reduced economic activity.
Under Biden, inflation rose sharply in 2021 and remained elevated into mid-2023 before gradually moderating.
The distinction between the two periods lies not only in headline inflation rates, but in how prices responded to external shocks, fiscal measures and supply constraints. Similar inflation readings can therefore reflect very different economic conditions depending on when inflation emerged, what factors drove it and how policymakers responded.
Inflation During Trump’s Second Term
Trump’s second-term economic agenda has included a broad expansion of import tariffs, including a higher general tariff rate on many imports and steeper duties on selected countries and sectors. Economists have generally warned that tariffs can put upward pressure on consumer prices, though the full inflationary effect depends on how much of the cost is absorbed by companies, passed to consumers or offset by other factors.
Inflation has remained above the Federal Reserve’s 2% target during much of Trump’s second term. The Consumer Price Index rose 3.4% over the 12 months ending in July 2026, down from 3.5% in June and 4.2% in May, according to the Bureau of Labor Statistics. 3
The inflation picture has also been complicated by a gap in official CPI reporting. BLS did not collect survey data for October 2025 because of a lapse in federal appropriations, and some October values remain unavailable or were later published only where alternative data made publication possible. That makes month-by-month comparisons around late 2025 less complete than usual.
War in Iran
Geopolitical tensions in the Middle East have introduced a new inflation risk. The U.S. war with Iran has disrupted energy markets and pushed global oil prices higher amid concerns about supply disruptions in the Strait of Hormuz, a key shipping route for global crude exports. Rising oil prices typically feed inflation by increasing transportation, manufacturing and logistics costs across the economy.
That impact has already been felt in 2026. Inflation rose from 2.4% in February to 3.3% in March, then reached 4.2% in May before easing to 3.5% in June and 3.4% in July, according to the Bureau of Labor Statistics. Energy prices have remained a major pressure point, rising 14.7% over the 12 months ending in July, even though the energy index declined 1.5% for the month.
Economists say the immediate impact is likely to show up first in gasoline and energy prices, which tend to respond quickly to geopolitical shocks. 4 GasBuddy data from late August 2026 shows that the average price of a gallon of gasoline in the U.S. was $4.079, which is 88.8 cents more than the average cost in 2025 ($3.191). 5
Over time, sustained increases in energy costs can ripple through broader consumer prices, particularly in sectors such as food, air travel and manufactured goods that depend heavily on fuel and shipping.
Inflation During Trump’s First Term
During Trump’s presidency from 2017 to early 2021, inflation remained relatively low and stable. Annual inflation, as measured by the Consumer Price Index (CPI), hovered around 2% or lower for most of his term. In 2020, inflation dropped to just 1.2% due to the economic slowdown brought on by the COVID-19 pandemic. The Federal Reserve continued its low-interest-rate policies during this period, and core inflation stayed subdued even as the economy expanded prior to the pandemic.
Trump’s economic agenda during his first term emphasized tax reductions, deregulation and increased use of tariffs. The Tax Cuts and Jobs Act of 2017 helped stimulate consumer spending and business investment, though overall inflation remained relatively subdued during this period. Tariffs imposed on Chinese goods and other imports contributed to higher prices in certain sectors, but their impact on overall inflation was modest.
Immigration restrictions may have tightened labor supply in some industries, potentially contributing to localized wage and price pressures. However, broader economic conditions including steady growth and stable global supply chains played a larger role in keeping inflation contained. Near the end of Trump’s first term, pandemic-related disruptions began to strain production and logistics, laying the groundwork for future inflationary pressures.
Inflation accelerated more significantly after Trump left office, with the sharpest increases emerging in 2021. These price gains were driven by a combination of global supply chain disruptions, shifts in consumer demand and expansive fiscal stimulus enacted during and after the pandemic. Together, these factors contributed to the elevated inflation levels observed in the years that followed.
Inflation Under Biden
Inflation rose sharply during Joe Biden’s presidency, especially in the first two years. In 2021, the CPI climbed to 7.0% by December and continued to rise the following year. It peaked at 9.1% in June 2022, the highest level in four decades.
Multiple factors contributed, including global supply chain disruptions, strong consumer demand, energy price spikes and fiscal stimulus in response to the pandemic.
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The American Rescue Plan, enacted in March 2021, injected $1.9 trillion into the economy through direct payments, unemployment benefits and aid to state and local governments. Critics argue this added fuel to inflationary pressure. However, others point to lingering pandemic effects and Russia’s invasion of Ukraine as larger contributors to global price instability.
The Federal Reserve responded with aggressive interest rate hikes starting in 2022, tightening credit and slowing inflation’s momentum. By mid-2023, inflation had cooled considerably but remained above the Fed’s 2% target.
Biden’s administration emphasized infrastructure investment and clean energy spending. Overall, the inflation surge under Biden reflected both domestic policy choices and global economic shocks.
Frequently Asked Questions Regarding Inflation
How Have Trump’s Tariffs in His Second Term Affected Inflation?
A universal 10–25% import tariff introduced in April 2025 contributed to upward pressure on consumer prices by increasing the cost of imported goods and materials used in domestic production. Inflation rose to approximately 2.7% in June 2025 and reached 3.0% in September 2025 before moderating to around 2.4% by early 2026, before the war with Iran began. Tariffs can affect inflation through supply chain cost increases that are often passed along to consumers, particularly in industries that rely heavily on imported components.
What Role Did the Federal Reserve Play in Managing Inflation Under Both Presidents?
During Trump’s first term, inflation remained relatively subdued, allowing the Federal Reserve to maintain comparatively low interest rates in an effort to support economic expansion and employment growth. Under Biden, inflation accelerated significantly following pandemic-related supply disruptions and strong consumer demand, prompting the Fed to begin a series of aggressive interest rate hikes in 2022. These increases helped slow borrowing and spending activity, which contributed to inflation easing by mid-2023.
What New Inflation Risks Have Emerged During Trump’s Second Term?
In addition to tariffs, geopolitical instability has introduced new inflation risks during Trump’s second term. The U.S.-Israeli war with Iran has disrupted global energy markets and pushed oil prices higher, which can increase costs across transportation, manufacturing and logistics sectors. Because energy is a foundational input for many industries, sustained increases in oil prices can have ripple effects throughout the broader economy. Heightened geopolitical uncertainty may also contribute to market volatility and supply chain disruptions that can further influence inflation trends.
How Can I Protect My Finances From Inflation?
One way to protect your finances from inflation is to focus on the inflation-adjusted, or real, return of your investments rather than simply looking at nominal gains. Diversified portfolios that include assets historically associated with inflation resilience, such as equities, Treasury inflation-protected securities (TIPS) or real assets, may help preserve purchasing power over time. A financial advisor can help evaluate your current allocation, rebalance your portfolio as needed and identify strategies designed to align with long-term inflation-adjusted financial goals. Maintaining an appropriate balance between growth-oriented and risk-managed investments can help mitigate the potential impact of rising prices on future income needs.
Bottom Line
Inflation under the Trump and Biden administrations followed different paths, shaped by contrasting policy environments and extraordinary external events. While headline inflation figures offer a point of comparison, broader factors such as pandemic-related disruptions, supply chain challenges and shifting trade policies can help explain why inflation rose, persisted or moderated at various times.
Tips for Beating Inflation
- An advisor can help you reassess your portfolio’s inflation sensitivity, rebalance your asset allocation and explore investment opportunities that align with long-term purchasing power preservation. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Focus on the inflation-adjusted (real) performance of your investments rather than just nominal gains. A portfolio earning 5% annually in a 4% inflation environment is effectively growing by just 1%.
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Article Sources
All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.
- “Current U.S. Inflation Rates: 2000-2026.” US Inflation Calculator | Easily Calculate How the Buying Power of the U.S. Dollar Has Changed from 1913 to 2026. Get Inflation Rates and U.S. Inflation News., July 23, 2008, https://www.usinflationcalculator.com/inflation/current-inflation-rates/.
- “Current U.S. Inflation Rates: 2000-2026.” US Inflation Calculator | Easily Calculate How the Buying Power of the U.S. Dollar Has Changed from 1913 to 2026. Get Inflation Rates and U.S. Inflation News., July 23, 2008, https://www.usinflationcalculator.com/inflation/current-inflation-rates/.
- CONSUMER PRICE INDEX – JULY 2026. Bureau of Labor Statistics, 12 Aug. 2026, https://www.bls.gov/news.release/PDF/cpi.PDF.
- Rugaber, Christopher, and Anne D’Innocenzio. “Inflation Held Steady Last Month, but That Was before the Attack on Iran Sent Energy Costs Soaring.” Associated Press, Mar. 11, 2026, https://apnews.com/article/inflation-gas-oil-trump-7303e4593d62c2dee899489571cb0548.
- “United States – Average for Regular.” GasBuddy, 25 August 2026, https://fuelinsights.gasbuddy.com/