WASHINGTON — Price increases are climbing once more after a period of gradual cooling in recent years, putting financial strain on American families and driving up costs for fuel, food, and daily essentials. Consumer prices jumped 3.8% in April compared to the previous year, marking the steepest rise in three years.
During a Wednesday discussion on Fox Business, financial commentator Larry Kudlow questioned Kevin Hassett, director of the National Economic Council, about the severity of current economic conditions. Hassett offered an optimistic perspective, suggesting price increases were experiencing a significant decline, especially when excluding blue states from the analysis.
Economic data, however, contradicts this assessment.
Here’s what the numbers reveal.
HASSETT: “Inflation is really out of control in the blue states. If you take out New York and California the story is radically different. So these really high costs, high regulatory states are driving inflation as well.”
THE FACTS: This statement is inaccurate and seems to rely on outdated information. Price increases are elevated across all nine Census Bureau regions nationwide, fueled by rising fuel costs linked to Middle Eastern conflict, which have also increased airline ticket prices. Higher energy expenses have boosted transportation costs, driving up food prices. Apparel costs have also surged, potentially reflecting delayed effects from President Trump’s tariffs.
“It’s not a blue state story,” said Omair Sharif, chief economist at Inflation Insights. “Gas is going up in every state.”
Hassett referenced a White House Council of Economic Advisers report showing slightly elevated price increases in blue states. However, this report utilized November data, predating the Iran war that started Feb. 28. Since then, skyrocketing fuel costs — climbing over 40% nationally per AAA — have eliminated those regional differences.
Simply put, excluding blue states from calculations has minimal impact, since numerous red states are experiencing higher price increases as well. The Labor Department produces the most widely tracked inflation measure, the consumer price index, publishing regional breakdowns. The Pacific region, comprising primarily Democratic-governed states like California, Washington, Oregon, Hawaii, and Alaska, recorded a 3.5% annual inflation rate in April — below the 3.8% national figure.
The East South Central region consists entirely of Republican-governed red states, posting a 4.5% annual inflation rate in April, exceeding the national average. This region includes Mississippi, Alabama, Kentucky, and Tennessee.
Certain red states are experiencing lower price increases than the national figure. The West South Central region, encompassing Texas, Oklahoma, Arkansas, and Louisiana, recorded a 3.2% price increase in April year-over-year. However, before the pandemic this region typically saw approximately 1% annual inflation, indicating deterioration even there.
Blue states like California or New York do typically maintain higher overall price levels than red states. For instance, Thursday’s gas prices averaged $3.72 per gallon in Texas according to AAA, compared to $5.98 per gallon in California.
Yet inflation tracks price changes, not absolute levels. Texas gas prices have surged since the Iran war began, mirroring California’s experience. Compared to last year, Texas gas prices have climbed nearly 36%, while California prices rose 26%.
HASSETT: “It’s on a deep downward dive if you look at the trimmed mean or the core, it’s headed right towards the Fed’s target.”
THE FACTS: This characterization is misleading. Core inflation measured by the consumer price index has actually increased this year, rising from 2.5% annually in January to 2.8% in April, the most recent available data. This figure remains below the overall 3.8% rate because core calculations exclude volatile food and energy prices to better capture underlying trends. The headline figure typically follows core movements over time, explaining why the Federal Reserve and economists emphasize core measurements.
Using the Federal Reserve’s preferred gauge — the personal consumption expenditures price index, or PCE — annual core inflation similarly climbed to 3.3% in April from 3.1% in January.
“There’s no deep dive happening in core inflation anywhere,” Sharif said.
A White House official, speaking anonymously, noted that CPI-measured core inflation remains below January 2025 levels.
The trimmed mean Hassett referenced represents one of numerous specialized alternative measurements, gaining recent attention through citations by Kevin Warsh, the new Federal Reserve chair appointed by President Trump. This calculation essentially eliminates many of the largest price movements, both upward and downward, attempting to determine whether price increases are spreading across diverse categories.
Hassett correctly noted that the Dallas Federal Reserve Bank’s PCE trimmed mean has declined modestly since year-start, dropping from 2.5% to 2.3%, approaching the Fed’s 2% target. Yet Dallas Fed president Lorie Logan cautioned Wednesday that this measure might mislead during inflationary surges due to calculation peculiarities. It remained low well into 2021’s inflation spike, for example.
The Cleveland Fed produces a separate CPI-based trimmed mean calculation, which recently increased to 2.8% from 2.6%.
