For Kasey McBlais, a 42-year-old single mom from Maine, the financial strain of running a household is becoming increasingly burdensome. Living with her two elementary school-aged children, McBlais faces escalating costs, from purchasing groceries to maintaining her home. "It's really challenging," she remarks about managing her budget, emphasizing that she lives paycheck to paycheck.
One significant expense this year was the cleaning of her chimney, which cost a staggering $500—up from approximately $200 when she purchased her home in 2019. This sharp increase in maintenance costs exemplifies the broader issues families are grappling with across the nation. Additionally, McBlais has noticed that her grocery budget isn't stretching as far as it used to, forcing her to creatively stretch meals to ensure her family has enough for leftovers. "I honestly don't expect anything to go back to the way they were; it's a matter of things leveling off where they are at," she reflects, highlighting the ongoing challenges many households face.
McBlais’ worries come at a time when the pace of inflation continues to rise, remaining well above the Federal Reserve's target of an annual rate of 2%. This trend leaves many consumers feeling frustrated by the stubbornly high prices of essentials, including groceries and housing. A recent CBS News poll revealed that two-thirds of Americans believe prices have continued to increase in recent weeks, with nearly everyone expressing concern that these rising costs will persist.
On Thursday, the Consumer Price Index (CPI) is expected to indicate that prices rose at an annualized rate of 2.9% in August, an increase from 2.7% in July. Some economists attribute this inflation to tariffs implemented during the Trump administration, suggesting that these tariffs contribute to rising prices. "Tariffs will raise prices, and that does of course lead to inflation—there's no way around that," states Erasmus Kersting, an economics professor at the Villanova School of Business.
While inflation remains below its pandemic peak, the Federal Reserve's progress appears to be slipping. Recent CPI data indicates that price growth is picking up again after reaching a low point in spring. As the Federal Reserve grapples with these challenges, President Trump has been vocal about his desire for the Fed to cut its benchmark rate. He recently tweeted that "there is no inflation!!!" and urged the Fed to make a substantial rate cut immediately.
In July 2024, when Trump pledged to "end the inflation nightmare," the CPI rate was at 2.9%, the same pace that economists anticipate for the upcoming report. Kersting notes that the president's stance on inflation seems to shift depending on the political climate, previously encouraging public attention when it benefited his electoral prospects.
In response to forecasts indicating a potential uptick in inflation, the White House defended Trump's record, asserting that "Joe Biden unleashed the worst inflation crisis in nearly four years—President Trump ended it." White House spokeswoman Taylor Rogers emphasized that core inflation has averaged 2.4% since Trump took office, claiming it to be the lowest six-month pace since March 2021. She dismissed claims from experts that tariffs have driven up prices, insisting that Trump is committed to making America affordable again.
A higher CPI report complicates the Federal Reserve's decision-making regarding interest rates. With the labor market reportedly stalling, the Fed faces the dual mandate of promoting full employment while keeping inflation in check. So far in 2025, the Fed has maintained its benchmark rate, with Chair Jerome Powell indicating a cautious approach due to the potential inflationary pressures from tariffs.
Rate reductions typically make borrowing cheaper, encouraging businesses and consumers to spend, which can further increase inflation. However, disappointing job reports have led to growing pressure on the Fed to consider rate cuts to stimulate hiring. Powell recently indicated that the Fed may be open to a cut, given the risks in the labor market.
According to CME FedWatch, there is a 90% probability of a 0.25 percentage point rate cut on September 17, with only a 10% chance of a more substantial 0.5 percentage point cut. While a rate cut could alleviate some financial burdens for consumers by lowering borrowing costs on credit cards and loans, many households continue to face heightened prices for groceries and essential bills.
