The number that Washington has been waiting for is finally out — the Consumer Price Index came in lower than expected at 2.7 percent. One could almost hear the sigh of relief emanating from 1600 Pennsylvania Avenue, and deservedly so. It was definitely good news for the administration, along with the positive quarterly GDP numbers and rising wages, after a disappointing July jobs report.

For most presidents, unemployment, inflation and wages have always been the three most important gears in the American economic engine, each with the potential to strengthen their political power or play the spoiler in moving their issue agenda and their party forward.

It has been ever thus. In 1934, during the Great Depression, President Franklin Roosevelt called unemployment “the greatest menace to our social order.” Sixty years later, Nobel Prize–winning economist Milton Friedman called inflation “taxation without legislation.”

Ronald Reagan’s presidency inherited an 11.8 percent inflation rate. By fall 1982, just before the off-year election, it had dipped to 5 percent. Major progress, but still too high. But when unemployment hit a vote-crushing 10.1 percent in September, the handwriting was on the wall for Republicans. The party lost 26 House seats.

President Barack Obama faced an unemployment rate that hit 9 percent in April 2009 and stayed at or above that mark for 30 consecutive months, peaking at 10 percent. The 2010 election came in the midst of that, and Obama and the Democrats lost 63 seats in the House.

President Joe Biden and ultimately Vice President Kamala Harris met a similar fate. After 111 consecutive months of inflation under 3 percent, the month after Democrats passed Biden’s American Rescue Plan, inflation jumped to 4.2 percent. The following month began a 23-month inflation streak of 5 percent or higher, peaking at 9.1 percent in June 2022. Democrats lost the House in November 2022.

By the end of Biden’s presidency, prices had outpaced weekly wages by 4.8 percent, a significant drop in family purchasing power and the central issue in the 2024 campaign, which led to Republicans winning the trifecta of the White House, Senate and House.

Republicans were elected to deal with inflation. The challenge here is that very rarely do you see prices drop, so the goal is to slow down the rate of increase. Ultimately, wage increases need to outpace price increases at a large enough scale to overcome the loss of purchasing power and get families back on the right budgetary track.

With the release of the Bureau of Labor Statistics’ Consumer Price Index report this week, we have reached the half-year mark, statistically, of Donald Trump’s presidency. Overall, this was a positive report, particularly in terms of wages versus prices.

The year-over-year Consumer Price Index remained at 2.7 percent in July, still a bit on the higher side, but it defied expectations that it would likely reach 2.8 percent. Since January, Biden’s last month in office, prices have increased 1.7 percent, according to the July CPI report. This was a slight uptick from 1.5 percent in the January to June time frame.

But the rise in wages is the real positive story in the economic numbers at six months in. Weekly wages in June had increased from January by 1.7 percent, outpacing price increases by just 0.2 percent. However, in July, weekly wages increased to 2.3 percent, while prices had increased 1.7 percent. That means since Trump was inaugurated, wages have outpaced prices by 0.6 percent.

This is a good sign that the economy may be heading in the right direction, with wages increasing at a faster pace than inflation. In the 2024 election, voters were clear that they wanted the next president and Congress to address the cost of living. Keeping wages ahead of inflation is the name of the game, and the report is a positive sign.

There are also some clear challenges ahead for Trump and congressional Republicans. The core inflation rate, which reflects everything except food and energy, came in at 3.1 percent year-over-year, which remains too high. Also, there is still a lot of uncertainty when it comes to the impact of tariffs on corporate pricing strategies and decisions.

Some companies may have relied on substantial inventories to avoid raising prices, at least in the short term. Whether restocking will be at higher prices under the tariffs remains an unanswered question that the next CPI report may help answer.

The administration must wait until September for the next Fed meeting to find out if a cut in interest rates is in the offing. The question is whether this month’s CPI data coupled with the disappointing July BLS jobs data will be enough to move Federal Reserve Chair Jerome Powell to finally lower the rates, as Trump has demanded.

Although weekly wage increases since Trump took office are outpacing inflation, with prices still going up, albeit at a much lower rate than the Biden years, what we don’t know yet is whether it will be enough for Americans to feel the impact and stop the president’s sliding numbers on his handling of the economy. We are not likely at that point yet, but the trend over the past six months of rising wages may mean the country is headed in a more positive direction.

In retrospect, Trump’s decision to diss the BLS July jobs report may cost him some political capital, giving his critics (Democrats and some in the media) an opening to downplay this week’s overall positive CPI report by calling into question the credibility of this week’s data and the BLS economic statistics going forward.

The new BLS nominee, E.J. Antoni, said in a Fox News Digital interview on Monday that “until [the employment report methodology] is corrected, the BLS should suspend issuing the monthly job reports but keep publishing the more accurate, though less timely, quarterly data.” In response it was good to see the White House made the right decision Tuesday and affirmed the continuation of the monthly employment reports.

How this plays out remains to be seen. But July was good news for Republicans.

David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for Speaker Newt Gingrich. He advises Fortune 100 companies, foundations and nonprofit organizations on strategic planning and public policy issues, as well as serving as an election analyst for CBS News.