Nobel economist warns Trump’s inflation disaster is about to get worse

President Donald Trump attends a Governors Dinner at the White House in Washington, D.C., U.S., February 21, 2026. REUTERS/Aaron Schwartz

Nobel Prize-winning economist Paul Krugman issued a warning to President Trump about his inflation crisis and laid out how it could get even worse, noting how a surge in wholesale prices will do little to ease the cost-of-living surge that everyday Americans are currently struggling with.

Writing on his Substack, Krugman referenced the latest Producer Price Index report and noted how it is more concerning than the consumer inflation figures that were recently released. Trump’s policies in regard to the Iran war and tariffs are directly responsible for adding to the cost households face.

The Labor Department reported that wholesale prices went up 1.3 percent in September, which is the biggest monthly increase since March 2022. Producer prices also increased 6.3 percent from the previous year, far exceeding expectations.

The new figures followed a Consumer Price Index report, which showed a trend of annual inflation increasing to 3.7 percent in September, up from 3.4 percent in August.

Krugman flagged the wholesale data, arguing it is particularly troubling because higher business costs often work their way into the prices consumers ultimately pay. That makes the report indicative of price increases still to come, rather than just a reflection of costs businesses face currently.

The economist pointed to diesel fuel prices, noting how it has increased twice as much as gasoline over the last year. This is because diesel is used for trucks, farms, and other parts of the supply chain, which then affects the prices of groceries and manufactured goods.

Krugman laid the blame on Trump’s policy decision for making the problem worse, arguing that he inherited manageable inflation before driving it up with Iran and his trade war.

“My basic point — that Trump inherited a relatively benign inflation picture and threw that inheritance away with his tariffs and war — is even clearer from the PPI than the CPI. And the PPI is often a leading indicator of future consumer prices, so there’s no relief visible in the near future.”

He also called out Trump's "shameful" deal to buy Russian diesel, noting that the quantity Putin would deliver won't be enough to make a meaningful difference.

But Krugman questioned the president’s repeated claims that inflation is falling, writing: “Is he deliberately lying, or does he truly not know what’s going on?”

The economist then theorized whether Trump is receiving accurate information about the economy:

“Bear in mind that Trump doesn’t read, and he certainly doesn’t read BLS data releases. And while he presumably has aides who do know what the numbers say, are they willing to tell him things he doesn’t want to hear? Probably not.”

Krugman referenced a new Fox News poll showing 55 percent of voters believe inflation is not under control at all, including 30 percent of Republicans.

The same survey put Trump’s approval rating at 36 percent, his lowest in Fox News polling, as Republicans approach November’s midterm elections amid growing voter frustration with the cost of living.

Krugman also noted that voters were highly concerned about government corruption, another issue that poses problems for Republicans.

“If these numbers don’t generate a blue wave, nothing will,” he concluded.

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