We know Donald Trump gets easily confused. During his campaign, he repeatedly insisted that he would keep us out of a war in Iran. Now, after being in office less than 14 months, he started an unprovoked war in Iran. Trump obviously couldn’t remember whether he was supposed to avoid a war in the Middle East or start one.

It seems he is facing the same problem when it comes to inflation and prices. He promised to bring prices down on the first day of his presidency. While inflation had been falling to the Fed’s 2.0 percent inflation target before Trump was elected, it is now close to 3.0 percent and looks to be heading higher, and that was even before the impact of his war against Iran.

We got the latest news on this front yesterday when the Bureau of Labor Statistics released February data on import prices. Non-fuel import prices rose by 1.1 percent in the month. Import prices are erratic on a monthly basis, but this followed a 0.8 percent rise in January. Year-over-year non-fuel import prices are up 2.5 percent.

There are two important issues to keep in mind when thinking about the impact this will have on the inflation households see. The first is that this index tracks prices before any tariffs are imposed. These are the prices charged when goods come off the boat. Trump’s tariffs are added onto these prices.

If exporters were eating the tariffs, as Trump promised us, then import prices would be falling. That is clearly not what we are seeing.

The other important item to note is that these data are for February. That is before the war on Iran sent the price of oil, natural gas, and many other commodities soaring. As bad as the February data look, March is virtually certain to be worse.

This reinforces the story we saw with the February Producer Price Index (PPI). The core PPI rose 0.5 percent in February and is up 3.5 percent over the last year. The relationship between inflation at the wholesale level (the PPI) and the retail level (the CPI) is not one-to-one, but it’s a safe bet that if we see higher inflation at the wholesale level, it will be coming out of consumers’ pocketbooks down the road.

The pickup in inflation is not a surprise; it is a completely predictable result of Trump policies of tariffs, mass deportations, and ad hoc dictates to private corporations (e.g., shutting down windfarms). It is not a story of hyperinflation, as some doomsayers may have forecast, but it is a story of higher inflation that eats into consumers’ purchasing power. That’s what you get when you turn the keys of government over to a confused old man.

This first appeared on Dean Baker’s Beat the Press blog.

The post Trump’s Confused, Again: He’s Bringing Prices Up appeared first on CounterPunch.org.

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