Cabot Phillips

On Tuesday, the Labor Department released their highly anticipated CPI report for the month of December, and it showed inflation sitting at 2.7 percent.

That is tied for the lowest mark we've seen since March of 2021.

Now, that still means prices have gone up a bit compared to the same month last year.

But more broadly, the pace of inflation has now fallen dramatically.

Remember, we were dealing with 9% at its peak in 2021.

And across Joe Biden's four years in office, the average inflation number was about 5%.

So...

Relatively speaking, 2.7% is a welcome respite.

And it's worth noting this latest report once again surprised experts who had projected a slightly higher number.

I know some of our listeners might accuse me of sounding like a broken record because they've heard me say that plenty of times before.

The experts were wrong.

But that is the reality.

Month after month after month.

Inflation has come in lower than expected, again, defying expert predictions and thrilling the White House.

For his part, President Trump celebrated the news Tuesday, saying it was further proof that Fed Chair Jerome Powell should lower interest rates.

For more context, I spoke with E.J.

Antoni, the chief economist for the Heritage Foundation.

He said that he believes the Labor Department is not accurately measuring a few inflation indicators and that the true inflation numbers are even lower.

Yeah, remember last year when Trump launched his Liberation Day tariffs?

Most economists, as you mentioned, predicted consumers would be hit the hardest as businesses would be forced to raise prices to compensate for the tariffs and then inflation would in turn go up.