What's happened
As of January 2026, US inflation remains steady at 2.7% year-over-year, above the Federal Reserve's 2% target, despite President Trump's tariffs on imports. Consumer prices, including food, have risen modestly, with uneven economic growth and job market challenges. Meanwhile, Israel faces rising food prices amid ongoing regional tensions, exacerbating cost-of-living pressures.
What's behind the headline?
Inflation Resilience Amid Tariffs
Despite expectations that Trump's tariffs would trigger sharp inflation and economic downturn, US inflation has stabilized around 2.7%, with GDP growth at 4.3% in late 2025. This resilience is partly due to limited foreign retaliation and a strong stock market rally, especially in tech sectors, which has boosted consumer spending primarily among higher-income groups.
Uneven Economic Impact
Growth has not translated into broad-based job gains; sectors like retail and manufacturing have shed jobs, partly due to immigration restrictions reducing workforce size. Smaller businesses struggle with tariff-related uncertainties and lack the capital to benefit from AI-driven productivity gains, which favor large tech firms.
Food Inflation and Cost of Living
Food prices in the US have risen modestly but remain a concern, with staples like beef and coffee seeing significant price increases. In Israel, food prices have surged by about 20% over three years, driven by monopolistic practices and war-related disruptions, pushing many families into food insecurity.
Political and Social Implications
Inflation remains a political flashpoint, with Trump blaming predecessors and facing criticism over economic policies. The Federal Reserve's independence is under threat amid political pressures. In Israel, rising living costs amid conflict fuel public discontent and highlight weaknesses in consumer protections.
Outlook
The US economy faces the risk of 'jobless growth' as AI adoption accelerates without corresponding hiring. Inflation pressures persist but may ease if tariffs remain moderated and supply chains stabilize. Israel's food inflation may continue unless market power is addressed and regional stability improves.
What the papers say
Megha Bahree at Al Jazeera highlights the unexpected resilience of the US economy, noting, "The shock and awe we anticipated just didn’t materialise," attributing this to limited retaliation and a stock market rally benefiting wealthier Americans. The New York Times counters Trump's claims by detailing rising food prices, stating, "The price of beef has risen by 16.4 percent over the last year," underscoring ongoing inflation concerns. The Guardian's Michael Sainato reports inflation holding firm at 2.7%, with consumers increasingly blaming the Trump administration, and notes political tensions around the Federal Reserve's independence. Israeli coverage from The Times of Israel reveals a different inflation story, with food prices rising 20% over three years amid war and monopolistic practices, pushing nearly 27% of families into food insecurity. These contrasting perspectives illustrate the complexity of inflation's impact across regions and demographics, highlighting political narratives, economic disparities, and social consequences.
How we got here
Inflation surged globally after the COVID-19 pandemic, peaking in the US at 9.1% in mid-2022. President Trump imposed tariffs on imports to protect domestic industries, sparking concerns about inflation and economic slowdown. In Israel, war and supply disruptions have driven food prices higher, worsening living costs.
Go deeper
- How have tariffs affected different sectors of the US economy?
- Why are food prices rising in Israel despite falling global raw material costs?
- What are the political implications of inflation data for the Trump administration?
More on these topics
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.
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The United States Department of Labor is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics; many U.S
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The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics and serves as a principal agency of the U.S.