Why the U.S. can’t get inflation under control, explained in seven charts

With inflation, interest rates and gas prices putting continuous pressure on the cost of living, affordability has become the top issue for many American voters as they head to the polls on Nov. 3 for the 2026 midterm elections.

Just two years ago, U.S. President Donald Trump capitalized on voters’ frustrations with steep inflation during the Biden administration, securing the presidency for a second time with promises of lowering prices for Americans.

But in many ways, life hasn’t gotten cheaper. Inflation is still far higher than monetary policy-makers aim for, and general prices have recently grown at faster rates than wages. For some products such as new vehicles, prices have stabilized but remain far higher than just a few years ago.

Much like the Democrats in 2024, the Republican Party – which holds slim majorities in both the House of Representatives and the Senate – is vulnerable to backlash as voters become fed up with Mr. Trump’s handling of the economy, according to many polls. And while the presidential office is not on the ballot, the outcome of the midterm elections will largely indicate how Americans feel about his second administration.

The University of Michigan’s most recent Survey of Consumers found about 55 per cent of respondents said they were worse off financially than a year ago – results mirroring those of the 2007-09 recession and the inflation spike in 2022. Another survey by the Associated Press-NORC Center for Public Affairs Research showed 65 per cent of respondents blamed Mr. Trump’s policies for the rise in prices, while 44 per cent continue to blame former president Joe Biden.

With the Republicans fighting to hold onto their House and Senate majorities, here’s a look at where inflation is hitting Americans the hardest.

Inflation hits U.S. harder than Canada

Since inflation began to run wild in 2021, the U.S. has never truly got it back under control.

The Federal Reserve, like the Bank of Canada, targets a 2-per-cent inflation rate and uses interest rates to guide inflation toward that goal.

But unlike Canada’s central bank, which has brought inflation close to target for much of the past two years, the Fed has struggled to deliver on its price stability mandate.

After consumer price index inflation hit a 40-year high of 9.1 per cent in the summer of 2022, it has gradually eased and hit an annual rate of 2.4 per cent in February.

Then, it took off again. Mr. Trump’s tariffs have put upward pressure on inflation, but it’s the U.S.’s months-long war with Iran – resulting in much higher gas prices – that’s played an outsized role in the upswing. In September, the most recent month of data from the U.S. Bureau of Labor Statistics, annual CPI growth hit 3.7 per cent.

In response, the Fed raised benchmark interest rates in September for the first time since 2023 to a range of 3.75 to 4 per cent, despite Mr. Trump’s demands to slash borrowing costs. Economists widely expect more rate hikes in the coming months.

For many years before the pandemic, inflation in Canada and the U.S. was largely around 2 per cent.

But a combination of factors – such as fiscal stimulus and supply shortages during the pandemic – contributed to the biggest inflationary wave in decades. The Bank of Canada’s rate-hike cycle over 2022 and 2023 helped to cool the economy and bring inflation to heel, in part because indebted Canadian households were especially sensitive to higher interest rates.

Inflation is (once again) outpacing wages

For six consecutive months, growth in average hourly wages has not kept up with rising prices. Americans’ purchasing power is on the decline, much like during the inflationary wave of a few years ago.

In September, the average hourly wage grew 3 per cent year over year, below the rate of inflation at 3.7 per cent.

Leading into the last presidential election in 2024 and during the early months of Mr. Trump’s second term, average wages were growing at a comfortably quicker pace than consumer prices.

However, the sudden spike in inflation in March after the start of the U.S.-Iran war has quickly flipped the switch. Crude oil benchmarks remain at, or in excess of, US$100 a barrel, putting upward pressure on inflation. Meanwhile, wage growth has cooled from rates above 4 per cent.

Financing a home purchase is more expensive

Homeowners in the U.S. and prospective buyers are feeling the financial pressure. Not only are prices lofty in many markets, but mortgage rates are on the upswing. In October, the average 30-year fixed mortgage rate jumped to 7.36 per cent from 6.86 per cent the month before. Rates are currently the highest since October, 2023, which was itself a 20-year high.

Mortgage rates are influenced by the bond market, where yields have been rising in recent months for many reasons, including concerns over profligate U.S. government deficit spending.

The Federal Reserve also hiked benchmark interest rates in September in a bid to cool inflation, and additional tightening is widely expected.

Republican lawmakers have pushed to make housing more affordable, with legislators on both sides of the aisle passing the 21st Century ROAD to Housing Act in June. The legislation is designed to increase housing supply and limits the number of single-family homes that large corporate investors, such as private equity firms, can purchase.

Car prices show the lingering psychological effect of the inflation crisis

Many Americans who hoped to see vehicle prices come down since they spiked in 2022 will be sorely disappointed. A new vehicle is costing Americans 22 per cent more in 2026 on average than it did six years ago.

After supply shortages caused by the pandemic, the price of a new vehicle spiked by about 12 per cent in 2021. Prices reached their peak in 2023 and have levelled off, according to CPI data, but have not returned to their pre-pandemic pricing.

One saving grace for prospective car buyers is that prices have not been drastically impacted by Mr. Trump’s tariff war with Canada, which has directly targeted the auto and steel industries. While automakers have said the White House’s tariffs have added billions in costs, the impact is not apparent in inflation data. From the time Mr. Trump brought in auto tariffs in April, 2025, the average price of a new vehicle has risen by only 0.5 per cent.

Gas prices are near all-time highs

Rising fuel and gasoline prices have been the biggest contributor to accelerating inflation. In September, more than half of the monthly increase in CPI was due to gas prices, which rose 9.1 per cent.

A voter survey by The New York Times reported that more than 40 per cent of Republicans disapprove of how Trump has handled gas prices.

Mr. Trump had promised to lower gas prices for American households in 2024, but military action in Iran is achieving just the opposite, leading to the closure of the Strait of Hormuz through which one-quarter of the global crude usually travelled.

Since the beginning of the conflict in February, gas prices have increased by more than 45 per cent, from a national average of US$3.1 per gallon in February to US$4.5 per gallon in September. Diesel prices in the U.S. have increased by more than 71 per cent, averaging over US$6 per gallon.

Historically, high gas prices have not boded well for incumbent governments during elections. Former president Jimmy Carter’s 1980 election loss has often been partly attributed to high gas prices caused by supply chain shortages and the Iranian hostage crisis.

Groceries

In the past year, 44 per cent of Americans said they had trouble paying for at least one basic necessity, with 20 per cent stating they needed a food bank or food pantry, according to a study conducted this fall by the Pew Research Center.

The most recent data from Feeding America, the largest hunger-relief organization in the U.S., shows about 48 million people lived in food insecure households in 2024, the highest number since 2014, affecting every county and congressional district across the country.

While grocery prices have only increased by about 3 per cent since the beginning of Mr. Trump’s second term in January, 2025, the average price of groceries has increased 33 per cent since the end of 2019 – becoming a major pain in the wallets of many Americans. Feeding America’s report found nearly half of those experiencing food insecurity had incomes too high to qualify for social support programs like the Supplemental Nutrition Assistance Program.

Price increases for ground beef, chicken, coffee and milk have been among the highest since 2019. Ground beef was US$6.79 per pound on average in September, an increase of 76 per cent in seven years. Chicken per pound has increased by 42 per cent, milk per gallon increased by about 29 per cent and coffee increased by more than 130 per cent over the same period.

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