Honestly, walking into a grocery store lately feels like a bit of a gamble. You see the headlines about the stock market or hear the White House talking about "energy dominance," but then you look at a carton of eggs or the price of a pound of ground beef and reality hits differently. It’s early 2026, and despite the big promises, for many of us, the cost of living is still rising under Trump in ways that feel both personal and persistent.
The numbers tell one story, but your bank account tells another.
According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) for December 2025 showed that prices rose 2.7% over the year. Now, 2.7% might sound low if you’re comparing it to the 9.1% peak we saw a few years back, but here’s the kicker: that’s on top of all the price hikes we already endured. Prices aren’t going back down to 2019 levels. They are just climbing a little more slowly, except for the stuff you actually need every single day.
Take a look at the "essentials." While gasoline has seen some relief—dropping below $3.00 in about 43 states—other bills are skyrocketing. Electricity prices jumped a massive 6.7% over the last year. Natural gas is up 10.8%. When your utility bill lands in your inbox, it doesn't matter what the "headline inflation" number says. You’re just out an extra fifty or sixty bucks a month.
Why the Cost of Living Is Still Rising Under Trump (And Why It’s Complicated)
If you ask the administration, they’ll point to the 2.8% cost-of-living adjustment (COLA) for Social Security that kicked in this month. They’ll talk about "No Tax on Tips" or the new tax cuts. And yeah, those help. But there’s a massive elephant in the room that economists are watching with a lot of anxiety: tariffs.
The Trump administration has leaned hard into tariffs as its signature economic tool. The Tax Foundation estimates that these tariffs amounted to an average tax increase per U.S. household of about $1,100 in 2025. For 2026? That number is projected to climb to $1,500.
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The Tariff Trap
Here is how it basically works. A tariff is a tax on imported goods. The government says it’s to protect American jobs, but the guys bringing the goods in—the retailers and manufacturers—have to pay that tax upfront. They don't just eat that cost. They pass it to you.
- Electronics and Appliances: We've seen prices for things like window coverings and kitchen appliances stay elevated because of these trade barriers.
- The "Inventory Buffer": For a while, stores had old stock they bought before the big 2025 tariff hikes. But that stuff is gone now. As 2026 unfolds, many experts, including those at Morningstar, expect a "second wave" of inflation as new, tariff-taxed inventory hits the shelves.
- The IEEPA Factor: There is a huge legal battle over the International Emergency Economic Powers Act. If the Supreme Court nixes some of these tariffs, we might see relief. If they don't, buckle up.
The K-Shaped Reality
There is a weird split happening in America right now. While lower- and middle-income families are basically "doom-spending" only on essentials, higher-income households are still out there buying luxury goods and traveling. The Federal Reserve’s "Beige Book" basically confirms this uneven pain. If you're working a blue-collar job, your wages might be up—manufacturing workers are on track for a $1,300 gain this year—but that gain is getting swallowed by a 15% increase in ground beef prices or an 18% jump in the cost of a steak.
The Housing Headache: Lower Rates vs. Higher Costs
One of the big pieces of news this month was the administration’s push to lower mortgage rates. President Trump directed the purchase of $200 billion in mortgage-backed securities through Fannie Mae and Freddie Mac. It actually worked—briefly. For the first time in three years, the 30-year fixed-rate mortgage dipped below 6%, hitting 5.99% in mid-January.
That sounds great, right?
Well, sort of. While lower rates make the monthly payment more affordable, they also tend to juice demand. If more people can afford to buy because rates are lower, but nobody is building new houses fast enough, the price of the house itself just goes up. Plus, the administration’s mass deportation efforts have started to hit the construction industry hard.
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When you lose a chunk of the labor force in construction, it gets more expensive to build. That means even if your interest rate is lower, the price of that new starter home stays out of reach. It’s a classic "give with one hand, take with the other" scenario.
What You Can Actually Do About It
Wait-and-see isn't a strategy. Since the cost of living is still rising under Trump, you sort of have to play defense with your finances. Honestly, the old rules of thumb are changing because the economy is so volatile right now.
1. Lock in what you can. If you’re one of the millions with a high-interest mortgage from 2024, the current dip below 6% is a gift. Don't wait for it to hit 3%—that might not happen with the current deficit. If you can save $200 a month by refinancing now, take the win.
2. Watch the "Tariff-Sensitive" goods.
If you need a new car or a major appliance, keep an eye on the news regarding trade deals. Prices for 2026 model year cars are expected to rise as automakers pass along those import costs. If you find a 2025 model on the lot, it’s probably a better deal than anything you'll see in six months.
3. Adjust your "Food Math."
It’s crazy, but some things are actually getting cheaper. Milk, eggs, and cheese have seen slight declines according to the latest CPI report. Meanwhile, beef and coffee are through the roof. It sounds like "budgeting 101," but shifting your protein sources right now actually makes a measurable difference in your monthly overhead.
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4. Maximize the new tax rules.
Whether you like the policy or not, things like "No Tax on Overtime" are designed to put cash back in your pocket. If your employer is set up for it, 2026 is the year to pick up those extra shifts. The average tax refund is expected to increase by about $1,000 this year; plan for that "found money" to go toward a high-interest debt or an emergency fund rather than a vacation.
The bottom line is that we’re in a transition period. The "inflation crisis" of the early 2020s has morphed into a "cost-of-living grind" in 2026. The administration is pulling big levers to try to fix it, but those levers—like tariffs and housing interventions—have side effects that keep prices from truly stabilizing.
Keep your eye on the January 30th budget deadline. If the government avoids another shutdown and the Supreme Court provides clarity on trade powers, we might see the market breathe a sigh of relief. Until then, stay lean and stay skeptical of the "everything is fine" narrative.
Next Steps for Your Wallet:
- Check your local mortgage rates today to see if you qualify for a sub-6% refinance.
- Review your utility provider's fixed-rate options before the summer cooling season hits.
- Update your W-4 to ensure you're taking full advantage of the 2026 tax law changes.