Inflation is consistently a top issue ahead of the 2024 presidential election — in CBS News’ polling in mid-August, 76% of registered voters said it was a major factor in their choice for president — and they want to know how nominees Donald Trump and Kamala Harris would address it.

Inflation — the rate of an increase in the price of goods and services over time — has hollowed out many voters’ wallets and made it tougher for Americans to save. According to the Federal Reserve, inflation averaged 1.9% a year from 2017 to 2021 when Trump was president. 

Though inflation recently cooled to a three-year low of 2.5%, it’s on track to average 5% a year during the Biden administration. 

Now, Americans shopping for housing must have an annual income of $106,500 in order to comfortably afford a typical home in the U.S., a sharp increase over the $59,000 they would have needed when Trump was president, thanks to rising home prices and high interest rates. 

The price of groceries also went up during Mr. Biden’s first three years in office, increasing by 20% over that period.

Inflation poses a challenge politically, too, because once prices go up, they rarely come down again. The International Monetary Fund explains, “Although high inflation hurts an economy, deflation, or falling prices, is not desirable either. When prices are falling, consumers delay making purchases if they can, anticipating lower prices in the future.” This results in less economic activity and lower growth. 

The Federal Reserve, which sets monetary policy, has been trying to give the nation a “soft landing.” Its target inflation rate is 2%.

Trump blames the Biden administration for high inflation, claiming during the debate with Harris, “We have inflation like very few people have ever seen before. Probably the worst in our nation’s history.” But while it did reach a 40-year high of 8% in 2022, in the modern era, inflation peaked at 13.5% in 1980.

Trump has said that he wants a more direct role in how the Federal Reserve sets its interest rates, telling reporters in August, “I feel the president should have at least (a) say in there. I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than in many cases, people that would be on the Federal Reserve or the chairman.”

But he also told Bloomberg in an interview that he would not fire Fed Chairman Jerome Powell before his term ends in 2026.

Two years ago, Congress passed and President Biden signed the Inflation Reduction Act, broad legislation that aimed to lower drug prices and spur investments in climate and domestic energy. Republicans say the law isn’t what’s helped bring down inflation, and they claim the government spending the Biden administration injected to the economy has had the opposite effect. 

The Biden administration has been tackling the effects of inflation, acknowledging the higher cost of key needs like housing, groceries and medication and has worked on easing some of the financial burden on Americans. Harris’ economic plans, though broad, suggest she would continue and expand this approach.

Harris says she’d help first-time home buyers and tackle price gouging

Harris proposes addressing higher prices at the grocery store by attacking what she says is price gouging by large grocery corporations. Harris says she wants to target businesses that aren’t “playing by the rules” and ensure there’s competition in the industry to bring down costs. 

Economists say the reasons behind higher prices at the grocery store are more complex than grocers trying to maximize profits. They point to supply-chain disruptions and higher labor costs, and other factors — such as record-low cattle numbers — have driven up beef prices.

Wage gains have outpaced inflation since May 2023, although many voters say they don’t feel that, or that isn’t their reality. Inflation has been a worldwide phenomenon, in part due to the pandemic’s impact on global supply chains. 

Harris also proposes tackling higher prices with an offer of up to $25,000 in assistance for many first-time homebuyers. 

But Edward Pinto, co-director of the conservative-leaning American Enterprise Institute, told CBS News that while down payment assistance would help some home shoppers instantly, the move would drive up prices in census tracts where a sizable portion of buyers receive assistance. When the Obama administration lowered the Federal Housing Administration mortgage insurance premium, a study by AEI found that once about 20% of homebuyers in a census tract were FHA buyers, home prices increased by an average of 4%. Pinto expects the effect to be even greater with $25,000 in governmental down payment assistance. 

“We’re still working through the numbers, but I think it’s safe to say it would be at least about a 5% price in home prices in the census tracts where a sizable portion of the people” — around 22% — “are getting this first-time buyer tax credit,” Pinto said.

Trump tariffs

Trump consistently criticizes the Biden-Harris administration for record-high inflation, but Trump himself has offered few proposals on lowering prices. 

He has said he wants to impose tariffs of 60% on Chinese imports and 10% to 20% on goods from other foreign countries, although campaign spokesperson Karoline Leavitt later said that what’s been reported is wrong, and Trump “has not settled on a definitive number for either particular tariff. He has floated multiple different numbers.” 

“I had tariffs, and yet I had no inflation,” Trump said during the debate in Philadelphia. “Look, we’ve had a terrible economy because inflation — which is really known as  a country-buster — it breaks up countries.”

A tariff hike to 60% on Chinese imports and 10 to 20% on all other foreign imports would cost middle-class families between $1,500 and $2,500 more a year, according to estimates by the Center for American Progress and the Peterson Institute for International Economics. 

Inflation predictions under Trump or Harris presidency

In August, Moody’s Analytics released a report on the macroeconomic impacts of a Trump or Harris victory. Earlier this year, Mark Zandi, chief economist at Moody’s Analytics, told CBS MoneyWatch at the time that if consumers “are upset now, they will be hopping mad a year from now” about inflation if Trump wins and enacts his policies. 

Moody’s estimates that a Republican election sweep in Congress and the White House would increase the annual inflation rate to 3.5% in 2025, a slight acceleration from 3%. Under Harris and a divided Congress — since the House is unlikely to return to Democratic control — Moody’s estimates inflation would lower to 2% in summer 2025.

contributed to this report.