Trump Proposes Gas Tax Suspension as Inflation Hits 3-Year High—But Economists Warn Relief Will Be Limited

London, May 13, 2026 — Former U.S. President Donald Trump has proposed suspending the federal gas tax in response to the sharpest inflation spike in nearly three years, but economists caution the measure may offer only temporary—and limited—relief to struggling Americans.

The Consumer Price Index (CPI) rose to 3.8% annually in April, the highest since May 2023, according to the Bureau of Labor Statistics (BLS). This marks the first time since April 2023 that wage growth has failed to outpace inflation, leaving many households financially squeezed. The latest data, released Tuesday, shows energy prices—particularly gasoline—driving the surge, with annual gasoline costs jumping 28.4% from a year earlier.

In a Monday interview with CBS News, Trump announced plans to suspend the federal gas tax—currently 18.4 cents per gallon for regular gasoline and 24.4 cents per gallon for diesel—for an unspecified period. However, economists warn that the move may not significantly lower pump prices, as state and local taxes, as well as global oil market dynamics, also play a critical role in final pricing.

“For consumers, that means the cost of living remains uncomfortable,” wrote economist Sung Won Sohn, a finance and economics professor at Loyola Marymount University, in a note Tuesday. “For the Federal Reserve, it means rate cuts are likely to be pushed further into the future.”

Why This Matters: The Inflation Crisis in 6 Key Points

• Inflation at 3.8%: The highest annual rate since May 2023, driven by energy costs.
• Gasoline prices up 28.4%: The largest annual increase in over four years, tied to the Iran war’s impact on global oil supplies.
• Wages no longer outpacing inflation: Real wage growth turned negative in April, the first decline since 2023.
• Federal gas tax suspension: Proposed by Trump but unlikely to fully offset rising costs.
• Core inflation still rising: Excluding food and energy, prices climbed 2.8% annually, signaling broader economic pressures.
• Federal Reserve response: Rate cuts now appear delayed as policymakers assess persistent inflation.

Energy Prices Drive the Surge

The April CPI report revealed that energy costs accounted for 40% of the total increase, with gasoline prices reaching their highest levels since July 2022. The conflict in Iran has further disrupted global oil supplies, pushing prices upward just as Americans prepare for peak summer travel season.

Airline fares also surged 20.7% annually, adding to consumer frustration. Many carriers have raised ticket prices due to higher jet fuel costs, dealing a blow to travelers already grappling with elevated living expenses.

Heather Long, chief economist at Navy Federal Credit Union, noted in an email that “inflation is the key drag on the U.S. Economy,” adding that the recent spike in fuel costs alone has added an extra $75 per month to the typical household’s budget.

Trump’s Gas Tax Proposal: Limited Relief?

Trump’s announcement to suspend the federal gas tax follows a pattern of populist economic measures aimed at easing consumer pain. However, experts argue that the impact will be modest. The federal tax represents only a fraction of the total cost at the pump, with state and local taxes—along with global oil prices—playing a far larger role.

In the same interview, Trump rejected the idea of a bailout for U.S. Airlines, stating that carriers must adapt to higher fuel costs rather than rely on government intervention. This stance contrasts with earlier proposals from some lawmakers to provide direct assistance to the aviation industry.

What’s Next for Inflation and the Fed?

With inflation now above the Federal Reserve’s 2% target, policymakers face a delicate balancing act. The latest CPI data suggests that price pressures are spreading beyond energy, raising concerns about sustained inflation.

Augustine Faucher, senior vice president and chief economist at PNC Financial Services Group, told CNN that “consumers were already under pressure; we’ve seen a softening in the labor market.” This could delay any potential rate cuts, keeping borrowing costs higher for longer.

The next major economic update will come with the May CPI report, scheduled for release on June 11, 2026. Investors and policymakers will closely watch whether inflation continues to climb or begins to stabilize.

Frequently Asked Questions

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