Important News

White House Says January Inflation Fell to 2.4% and Real Wages Rose; Administration Credits Policy Actions

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Key takeaways

  • The White House reported year‑over‑year inflation of 2.4% in January and said this beat expectations.
  • The administration said core inflation fell to its lowest level in nearly five years.
  • Real average hourly earnings for private‑sector workers rose 1.2% in January; middle‑ and lower‑wage workers gained 1.5%.
  • The White House stated real earnings outpaced inflation by nearly $1,400 in President Trump’s first year back in office.
  • The administration highlighted price declines for beef, eggs, coffee, energy (−1.5%), gasoline (−3.2%), and used vehicles (−1.8%) in January.
  • The White House credited prescription drug price declines to its drug‑pricing measures — citing Most Favored Nation deals and the Great Healthcare Plan — and urged Fed interest‑rate cuts to further boost the economy.

Follow Up Questions

What is the Consumer Price Index (CPI) and who calculates it?Expand

The Consumer Price Index (CPI) is a monthly measure of the average change over time in prices urban consumers pay for a fixed “market basket” of goods and services; it is compiled and published by the U.S. Bureau of Labor Statistics (BLS).

What is "core inflation" and which items does it exclude?Expand

“Core inflation” usually means the CPI excluding food and energy prices — two categories that are especially volatile — so economists look at “all items less food and energy” to see underlying inflation trends.

How are "real wages" calculated and what does "real wages grew by $1,400" mean?Expand

Real wages are nominal wages adjusted for inflation (usually by dividing nominal average hourly earnings by a price index such as the CPI); saying real wages grew by about $1,400 means workers’ pay had roughly $1,400 more purchasing power over the period in question, but the precise dollar figure depends on the White House’s calculation method (hours used, population covered, and time window) and cannot be verified from the statement alone.

What are "Most Favored Nation" drug pricing deals and how do they work?Expand

Most Favored Nation (MFN) drug-pricing deals seek to align U.S. prices with the lowest prices paid by a set of comparable developed countries; the 2025 Executive Order directed agencies to pursue MFN targets and the administration negotiated voluntary agreements with manufacturers to offer lower prices or sell certain products at those prices in the U.S.

What is the "Great Healthcare Plan" and which specific drug‑pricing reforms does it include?Expand

The Great Healthcare Plan is the White House’s 2026 policy framework to lower drug prices and insurance costs; it calls for codifying the administration’s MFN deals, expanding price transparency, changing subsidy flows (sending some subsidies directly to consumers), reforming pharmacy benefit manager practices, and allowing more OTC switches — but the plan is a proposal and many specifics would require legislation or detailed rulemaking.

Which independent agencies or data sources (BLS, Fed, Congressional Budget Office) can confirm the inflation and wage figures cited here?Expand

Independent U.S. data sources that can confirm the CPI and wage figures are: the Bureau of Labor Statistics (CPI and average hourly earnings/real earnings), the Federal Reserve (analysis and inflation measures), and the Congressional Budget Office (independent budget and economic estimates); primary verification should start with BLS monthly CPI and earnings releases and Fed/CBO reports for context.

How would interest‑rate cuts by the Federal Reserve affect inflation, wages, and the broader economy?Expand

Lowering the Fed’s policy interest rate tends to reduce borrowing costs, which can boost spending and hiring (supporting wages and growth) but also can raise inflation if demand outpaces supply; the timing and size of effects vary, so rate cuts can lift wages and growth in the short run but may push inflation higher over time if not matched by productivity or supply gains.

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