Trump Fixed Inflation, but Now Forward Sets Midterm Narratives

President Donald Trump has managed to make good on one of his primary campaign promises to end former Democrat President Joe Biden’s inflation crisis, but the progress in Year 1 will now be the standard by which 2026 will be measured.

In layman’s terms: Trump’s own success will be the new standard he has to keep up with before the 2026 midterms, experts say.

“The president’s approval rating has been remarkably resilient on handling of the economy, immigration, and foreign policy,” Republican pollster Robert Blizzard told Axios. “But since he took office, it continues a downward trajectory on handling inflation.

“This continued fatigue is providing an opening for Democrats to criticize the president on his signature issue of the economy.”

Inflation has edged down from 3% to 2.7% since Trump took office. But, since inflation is measured year over year (YoY) – instead of administration to administration – the midterm election year will present inflation data as Trump Year 1 (correction time from Biden inflation) versus Trump Year 2 (where he needs to maintain his own administration’s high standard of low inflation).

“President Trump pledged to end Joe Biden’s inflation crisis, and the administration’s supply-side policies have delivered: Inflation is trending towards an annualized rate not seen in years while the prices of gas, eggs, and other household essentials have declined,” White House spokesperson Kush Desai told Axios.

Still, public opinion in polling has lagged behind Trump’s successes. Polling shows inflation far outpaces other voter concerns, with costs of drugs, groceries, and consumer goods threatening to define the campaign narrative, Axios reported.

GOP strategists warn that Democrats could seize on $8 cereal and drug shortages as powerful attack lines. Even if Trump fixed the Biden problems, he is going to be measured against himself from September 2025 to September 2026.

One Trump antagonist getting out of Congress, perhaps due to potential Trump opposition, is warning about inflation as Republicans hope to keep their narrow House majority.

“If we don’t address some of [the economic issues], I think it will create headwinds going into a cycle where you already expect headwinds with a midterm after a presidential election and the change of party in the White House,” Sen. Thom Tillis, R-N.C., told Axios.

In public debate and politics, the YoY inflation measure usually gets the most attention because it smooths out short-term fluctuations and better reflects the lived experience of rising costs.

How inflation is typically measured:

• The headline inflation rate you see in the news (like the Consumer Price Index, or CPI, in the U.S.) compares the average level of prices in a given month with the same month one year earlier.

• For example, if CPI in July 2025 is 2.7% higher than CPI in July 2024, the reported inflation rate for July 2025 is 2.7% YoY.

Other ways inflation is measured:

• Month over month (MoM): Economists and policymakers also track how prices change from one month to the next. This can highlight shorter-term trends, like sudden jumps in gas or food prices.

• Core inflation: Excludes volatile categories like food and energy, and is usually reported YoY and MoM.

• Annualized rates: Sometimes analysts “annualize” short-term changes (e.g., multiplying a 0.2% monthly change by 12) to show what would happen if that pace lasted a full year.

Here is how the Federal Reserve measures inflation, and why it sometimes differs from the CPI you usually hear about:

CPI (Consumer Price Index)

• Published by the Bureau of Labor Statistics (BLS).

• Tracks the out-of-pocket cost of a fixed “basket” of goods and services (housing, food, gas, healthcare, etc.) based on household surveys.

• Reported as year-over-year (YoY) and month-over-month (MoM).

• Strength: reflects what consumers experience in their everyday spending.

• Weakness: can overstate inflation because it does not fully account for how people change their behavior (like switching to cheaper products).

PCE (Personal Consumption Expenditures Price Index)

• Published by the Bureau of Economic Analysis (BEA).

• Measures price changes across all goods and services consumed, including those paid by employers and government (like health insurance).

• Uses a “chain-weighted” method that better reflects substitution — if beef prices spike, it assumes consumers may switch to chicken instead.

• The Fed focuses on core PCE (excluding food and energy) as its preferred inflation gauge.

Why the Fed prefers PCE over CPI

1. Broader coverage – includes more spending categories.

2. More flexible weighting – adapts to changing consumer behavior.

3. Lower volatility – gives a smoother signal for monetary policy.

For context:

• CPI inflation is usually a bit higher than PCE inflation.

• The Fed’s official 2% inflation target is based on core PCE YoY.

Here’s a side-by-side chart of CPI vs. PCE inflation (year-over-year %).

The solid line shows CPI, which tends to run higher.

The dashed line shows PCE, the Fed’s preferred measure.

The red dotted line marks the Fed’s 2% target.

You can see CPI and PCE track each other closely, but PCE is consistently lower — one reason the Fed prefers it when setting policy.

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