Hidden Inflation in America: The Role of Market Power and Past Policies
Washington, D.C., Monday, 1 December 2025.
America faces hidden inflation as companies exploit market power for price hikes, compounded by past policies like Trump’s tariffs, raising living costs and affecting economic stability.
Market Power and Inflation Dynamics
Recent analyses highlight how market power significantly contributes to hidden inflation in the United States. Companies like Amazon and HP, leveraging their market dominance, have the ability to set prices higher than competitive levels, exploiting their deep insights into consumer behavior. This practice of ‘premiumization’ has been exacerbated by monopolistic practices, particularly in the tech and healthcare sectors, where digital technology allows these corporations to capture market share without necessarily passing cost savings from technological advancements onto consumers [1].
Impact of Past Policies on Current Inflation
Policies from the administration of former President Donald Trump have also been identified as a driver of inflationary pressures. Trump’s tariffs, for example, have added approximately 0.6 to 2 percentage points to the core inflation rate, according to various estimates. These tariffs have increased costs across numerous sectors, including manufacturing and construction, thereby contributing to the overall rise in consumer prices [1]. Furthermore, cuts to public programs such as SNAP and Medicaid have indirectly increased living costs for lower-income individuals by reducing their purchasing power [1].
Economic Consequences and Antitrust Solutions
The compounded effects of market power and past policy decisions have significant implications for the U.S. economy. Rising inflation diminishes the Federal Reserve’s willingness to reduce interest rates, which could adversely affect low-income workers if wage growth fails to keep pace with inflation [1]. Additionally, the lack of robust antitrust enforcement has allowed price-gouging practices to persist, further straining household budgets. Experts suggest that revitalizing antitrust policies could be an effective remedy to curb these opportunistic price hikes and restore economic stability [1].
Future Outlook and Policy Recommendations
To address these challenges, there is a growing call for more radical policy reforms under future U.S. leadership. The implementation of a universal nonprofit insurance system, for instance, could potentially save the economy about 6 percent of GDP, equating to $1.2 trillion annually [1]. Such measures, alongside stronger regulatory frameworks to prevent monopolistic practices and promote fair competition, could help mitigate the adverse effects of hidden inflation and enhance consumer welfare. The timeline for these changes remains uncertain, but the need for immediate action is clear [1].