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Donald Trump on Tuesday said he accepted prices were too high but insisted they were “coming down tremendously” as he sought to address politically damaging claims of a cost-of-living crisis gripping the US.

In his first rally since the summer, the president acknowledged Americans were being squeezed by high prices but blamed the issue on his predecessor Joe Biden and said his administration’s policies were quickly improving the cost of living.

Trump countered the criticism he has faced in recent weeks for saying that the affordability crunch was a “hoax” perpetuated by Democrats, prompting allegations that he was out of touch with regular Americans.

“I can’t say affordability hoax, because I agree the prices were too high. So I can’t call it a hoax, ’cause they’ll misconstrue that,” he said. “Prices are coming down tremendously from the highest prices in the history of our country.”

The speech marked the president’s most forceful attempt yet to tackle an issue that has sapped his approval ratings, which are among the lowest on record.

“The only thing that’s going up big is the stock market and your 401k,” Trump told his supporters. “And I said it the other day and a lot of people misinterpreted it. They said: ‘Oh, he doesn’t realise prices are high.’ Prices are coming down substantially.”

The rally came as Trump looks to build momentum for Republicans ahead of crucial midterm elections in late 2026 that will determine control of Congress.

He said that the speech at the Mount Airy Casino Resort in the electoral battleground of north-east Pennsylvania — which lasted over 90 minutes — would be the first of many events.

The president called up members of the public, including a restaurant server and a bartender, who he said would benefit from measures in his so-called big, beautiful fiscal legislation to remove taxes from tips and overtime. Trump said voters had yet to feel the benefits of these policies.

Pennsylvania, a crucial swing state, narrowly backed Trump over Kamala Harris last year. He won Monroe County, where the speech took place, by just 669 votes, making him the first Republican to do so in two decades.

The increase in the cost of living has emerged as a significant political weakness for Trump and his party a year after inflation concerns helped propel him to victory over Harris.

Trump has struggled to hone his message on cost-of-living strains, varying between dismissing the price rises as a hoax but also vowing to fix them.

On Tuesday, one of his warm-up acts was Scott Bessent, the Treasury secretary, who boasted of the country’s success in raising debt in the global bond market.

Standing in front of a banner proclaiming “LOWER PRICES” and “BIGGER PAYCHECKS”, Trump cast blame for inflation on Democrats. “They gave you high prices, they gave you the highest inflation in history, and we’re . . . bringing those prices down rapidly: lower prices, bigger paychecks,” he said.

While the price of some goods such as petrol and eggs has fallen since he returned to office, many essentials including shelter, healthcare and other groceries have continued to rise, piling pressure on lower-income Americans in particular.

In September, the last month for which official data is available, annual inflation sat at 3 per cent, higher than during Biden’s last full month in office. Recent US inflation reports have been delayed due to the government shutdown this autumn.

Mark Paul Jones, a 58-year-old musician and artist, said Trump was “addressing some of the stuff” around affordability but pinned the blame for high prices on Democrats.

“The media immediately started in the third or fourth day [of Trump’s return to office] saying ‘oh inflation is out of control’. I’m like: it’s been out of control for five straight years,” he said.

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Still, voter frustration over stubborn inflation has become an asset to Trump’s opponents, spurring Democrat victories in local elections last month and sparking tensions within his own Republican party.

Even many of Trump’s supporters are expressing concern about rising prices. In a Politico poll this month, 46 per cent of voters said the cost of living was the worst they could recall, including 37 per cent of those who backed him in last year’s presidential election.

Christian Booth, who is 27 and unemployed, said recent election results had been a “worrying sign” for Republicans. “I feel like we’re going in the wrong direction in these races. We’ve got to get better messaging and make things more affordable.”