The current annual inflation rate is 3%, still stubbornly above the Fed's 2% target.
Consumers pay more close attention to cumulative inflation, and prices are 23% more expensive today than they were before the coronavirus pandemic recession began in February 2020.
The Federal Reserve cut interest rates a full percentage point across three consecutive meetings in 2024, but officials look to take a more cautious approach in 2025 as price pressures stay sticky.
Inflation is nowhere near as hot as it was when the U.S. economy first emerged from the coronavirus pandemic, but price pressures remain sticky.
Prices last month jumped 0.5 percent, the biggest surge since August 2023 as shelter, energy and grocery costs all increased, according to the Bureau of Labor Statistics' monthly consumer price index (CPI) report. Excluding food and energy, so-called core prices rose 0.4 percent, the most since February 2024, thanks to increases in airfares, used cars and trucks, medical care, car insurance and more.
Inflation has cooled dramatically since the summer of 2022, historical BLS data shows. The slowdown gave Fed officials cover to begin dialing back interest rates from a 23-year high, cutting borrowing costs a full percentage point across three consecutive meetings in 2024. Fed officials, however, say they're in no hurry to reduce borrowing costs further. Investors are now betting that the Fed won't cut interest rates again until its final rate-setting meeting of the year in December, according to CME Group's ( CME ) FedWatch tool.
Consumer prices are 23 percent more expensive than they were in February 2020, a Bankrate analysis of Bureau of Labor Statistics data shows. That price burst means Americans would need about $1,230 to buy the same goods and services that cost $1,000 when the coronavirus-induced recession occurred.
A little bit of inflation is good for consumers. The economy keeps growing and businesses continue expanding, hiring workers and bumping up their pay along the way. Too much inflation, however, feels akin to taking a pay cut. High inflation has consequences beyond just affordability, complicating saving for emergencies or investing for retirement.
Looking for the latest information on consumer prices? Here's a round-up of where inflation is improving -- and where it's still remaining stubborn.
Current inflation rate
Prices in January rose 3% from a year ago, up from 2.9% in December, according to the Bureau of Labor Statistics consumer price index (CPI).
Current core inflation rate
Excluding food and energy, prices rose 3.3% in January, edging up from last month's 3.2% rate.
The drivers of inflation last month
Grocery prices jumped the most since October 2023 (1.9%), with egg prices between December and January soaring the most since June 2015 (15%).
Over the past 12 months, the overall annual inflation rate in January hit 3 percent, up from 2.9 percent in December and a post-pandemic low of 2.4 percent just last September, the Bureau's report showed. Excluding food and energy, "core" prices picked back up to 3.3 percent, hotter than expected.
Inflation is well below its peak in June 2022, when it smashed 9.1 percent. Yet, the figures reflect bumpier progress on inflation's path back to the Fed's 2 percent target.
Of the nearly 400 items that BLS tracks, about 3 in 4 items (or 73 percent) increased in price between January 2024 and January 2025.
According to BLS, these are the prices that increased most over the past year:
| Item | January 2024-January 2025 increase |
|---|---|
| Eggs | 53.0% |
| Video discs and other media* | 19.6% |
| Motor vehicle insurance | 11.8% |
| College textbooks | 10.7% |
| Other condiments | 10.3% |
| Postage | 8.4% |
| Transportation services | 8.3% |
| Care of the sick and elderly at home* | 8.1% |
| Girls' apparel | 8% |
| Cigarettes | 7.9% |
| *Denotes an item that isn't seasonally adjusted | |
Case in point: Back in May, energy prices rose 3.5 percent over the 12-month period, appearing to be gaining speed from April's 2.5 percent annual increase despite dipping 2 percent over the month. The reason for the discrepancy? May 2023 was a cheaper month for energy costs.
Consumers, however, should take seasonal variations into account. For instance, the holiday travel season likely contributed to last month's jump in airfare prices. BLS doesn't seasonally adjust all of its items, and year-over-year inflation rates can better smooth out those variations.
According to BLS, these are the prices that increased most over the past month:
| Item | December 2024-January 2025 increase |
|---|---|
| Eggs | 15.2% |
| Video discs and other media* | 7.1% |
| Parking and other fees | 6.4% |
| Fuel oil | 6.2% |
| Frozen noncarbonated juices and drinks* | 5.3% |
| Instant coffee* | 4.4% |
| Sporting event tickets | 4.3% |
| Bacon and related topics | 4.1% |
| Margarine | 3.6% |
| Recreational books* | 3% |
Consumers might look at the massive increase in egg prices and wonder why the overall inflation rate is just 2.9 percent. To put it simply, the Bureau of Labor Statistics assigns weights to each individual good or service it tracks, based on how prevalent it's considered to be in a consumer's monthly budget.
Currently, the main contributors to inflation are shelter, insurance and services more broadly.
Shelter accounted for nearly three-tenths (or 26 percent) of the month-over-month increase in prices in January and 53 percent of the increase in prices over the past 12 months.
Car insurance accounted for 11 percent of both the monthly and annual inflation rates.
Services accounted for more than two-thirds (64 percent) of inflation over the past month and 90 percent of the 12-month increase in prices.
Excluding food, energy and shelter, prices would've increased about 1.9 percent from a year ago, below the Fed's preferred 2 percent goalpost.
The drivers of inflation have changed dramatically since the initial post-pandemic price burst. When price pressures peaked in June 2022, shelter was driving just 20 percent of the annual increase in prices. But as consumers emerged from lockdowns with massive pent-up demand at the same time as global supply shortages, energy was driving about a third (32 percent) of inflation, while food prices were driving 15 percent of inflation.
Supply chains have untangled since the pandemic, helping take the pressure off of goods inflation. However, services such as rent, insurance and even the price of dining out can take months, if not years, to fluctuate -- depending on what's happening with labor costs and consumer spending.
To combat inflation, officials on the Federal Reserve lifted borrowing costs from a rock-bottom level of near-zero percent to a 23-year high of 5.25-5.5 percent. Now, borrowing costs are in a target range of 4.25-4.5 percent.
Of the nearly 400 items BLS tracks, just 21 (or roughly 6 percent) are cheaper today than they were pre-pandemic.
To be sure, prices are expected to rise in the healthiest of economies -- though only gradually, at a goalpost of around 2 percent a year.
According to BLS, these are the top 10 items that have jumped the most in price since the pandemic:
| Item | February 2020-January 2025 increase |
|---|---|
| Eggs | 110.9% |
| Frozen noncarbonated juices and drinks* | 58.9% |
| Motor vehicle insurance | 55.1% |
| Margarine | 54.8% |
| Motor vehicle repair | 51.4% |
| Uncooked beef roasts | 46.9% |
| Other fats and oils, including peanut butter | 45.8% |
| Repair of household items* | 45.2% |
| Utility (piped) gas service | 41.7% |
| Cigarettes | 41.5% |
| *Denotes an item that isn't seasonally adjusted | |
| Item | February 2020-January 2025 decrease |
|---|---|
| Smartphones* | -58.0% |
| Telephone hardware, calculators, and other consumer information items | -48.7% |
| Information technology commodities | -27.0% |
| Televisions | -26.6% |
| Education and communication commodities | -23.1% |
| Computer software and accessories* | -17.5% |
| Health insurance* | -16.6% |
| Other video equipment | -14.5% |
| Video and audio products | -13.9% |
| Dishes and flatware | -11.5% |
Looking for an easy analysis of how inflation is impacting the key items in your budget? Here's what Bankrate found.
Gas
Gasoline prices aren't rising as rapidly as they once were, with prices technically 0.2 percent cheaper than they were a year ago after soaring as high as 59.8 percent in June 2022. Even so, prices at the pump cost 29.2 percent more than before the pandemic.
Energy prices, however, tend to be volatile. Between March and April of 2024, for example, prices at the pump increased across all 50 states between March and April, AAA data showed. Then, the following one-month period, they dipped in every state except Colorado.
Food
Grocery prices (formally known as food at home) rose 1.9 percent from a year ago and are about 27.4 percent more expensive than they were before the pandemic, BLS data indicates. At their peak, grocery prices soared 13.6 percent in August 2022 from a year ago.
Of the major shopping categories:
Meats: up 3.2 percent over the past year and 30.1 percent since February 2020
Fish and seafood: up 0.9 percent from a year ago and 17.1 percent since the start of the pandemic-induced recession
Dairy: up 1.2 percent over the past year and 21.2 percent more expensive since the pandemic
Fruits and vegetables: up 0.2 percent over the past year and 18.4 percent more expensive than before the pandemic
Sugar and sweets: up 4.3 percent from a year ago and 33.1 percent since the pandemic
Meanwhile, the price of dining out at a restaurant (formally known as full service meals and snacks) increased 3.3 percent from a year ago, capping off a 28 percent increase since the pandemic.
Rent
Rent has become a key corner of inflation -- and one of the costliest categories of a consumer's budge. Prices, however, may finally be slowing, at least gradually.
Rent of primary residence rose 0.3 percent between December 2024 and January 2025, a clear cooldown from the post-pandemic peak of 0.8 percent. Over the past year, rents have risen 4.2 percent, the slowest annual rate since February 2022.
Even so, Americans who've had to sign new leases since the outbreak are feeling the pinch: Rent is up 26.7 percent since the pandemic.
Real-time measures have showed that rents aren't rising as quickly as they were at the height of post-pandemic lockdowns, though the sharper slowdown that most economists and Fed officials have been waiting for has taken longer to come to fruition. One reason could be because of lags, even longer than usual for shelter prices as leases and housing agreements take longer to roll over from the previous year. Another could simply be because homes and mortgage rates have stayed pricey, keeping more renters on the sidelines than usual.
Vacations
Inflation hasn't just made the prices of key household essentials more expensive -- but the costs of vacations and travel, too. Airline ticket prices, for example, once soared as much as 43 percent from a year ago in September 2022.
Those prices aren't that rapidly anymore, though elevated demand for travel has put upward pressure on those prices.
Airfares: up 7.1 percent from a year ago and now 2.8 percent more expensive since February 2020
Car and truck rental: down 3.6 percent from a year ago but up 17.1 percent since the pandemic
Hotels and motels (lodging away from home): up 1.9 percent from last year and 15.6 percent more expensive than before the pandemic
Car ownership
Owning a car has been especially pricey since the pandemic, from the cost of the car itself and the interest rates that finance it to the repair and insurance costs required for upkeep. Making car inflation hard to escape, the majority of households (roughly 92 percent) owned at least one car in 2022, according to the Census Bureau.
Motor vehicle insurance: up 11.8 percent from a year ago and 55.1 percent since the start of the pandemic in 2020
Vehicle repair: up 7.4 percent from a year ago and 51.4 percent since February 2020
New vehicles: down 0.3 percent from a year ago but still 20.5 percent more expensive since February 2020
Used vehicles: up 1 percent since January 2024 and 31.9 percent more expensive.
Leased vehicles: up 1.4 percent in September from a year ago (the latest data available) but 38.5 percent more expensive since the start of the pandemic
The Department of Commerce's personal consumption expenditures (PCE) index
Prices in December rose 2.6% from a year ago, up from 2.4% in November, 2.3% in October and 2.1% in September, according to the Department of Commerce's separate inflation gauge. Excluding food and energy, prices rose 2.8% from a year ago for the third consecutive month.
Fed policymakers look at the full picture of economic data when setting interest rates. But officially, they prefer a different measure to see whether they're succeeding at controlling inflation: the Department of Commerce's personal consumption expenditures (PCE) index.
But that preference has been keeping Fed watchers on their toes. Lately, the PCE index has been indicating slower inflation, with overall prices now just three-tenths of a percentage point above the Fed's target (2.6 percent as of December 2024, versus 2.9 percent in the same month for CPI). Excluding food and energy, "core" prices in December are up 2.8 percent from a year ago versus 3.2 percent in BLS' gauge that month.
Those variations have always been afoot. Mainly, they're because of methodology differences. For starters, PCE takes consumers' substitutions into account (for example, one family's decision to buy fish over meat for one month because it's cheaper).
But another key difference is to blame lately. Both agencies estimate an item's relative importance differently, with BLS' gauge giving the most weight to the category of inflation that's coincidentally been the hottest: shelter.
For Fed officials, the story remains largely the same: Inflation has majorly improved since peaking at a 40-year high back in 2022 but is still stubborn.
Slowing inflation has given the Fed room to cut interest rates and consumers a chance to recover some of the purchasing power that they lost. Even so, prices are still higher today than they would've been had the pandemic not occurred, underscoring one of the reasons why Americans might still be feeling some sticker shock.
Even after the Fed's rate cuts, borrowing costs are bound to remain historically high: The U.S. central bank's key benchmark interest rate is still higher than at any point since the Great Recession -- keeping borrowing costs elevated on the products consumers pay, from credit cards and auto loans to home equity lines of credit (HELOCs).
Comparison shop as much as you can: Consumers know to compare offers from multiple lenders before locking in a loan. Why not the same for the items you buy on a regular basis? Compare prices at multiple retailers, see if any stores offer price match and craft a budget. If a product or ingredient pushes your spending goal over the edge, consider swapping it out for something else.
Use the personal finance tools at your disposal: Finding the right credit card that helps you earn rewards on the purchases you were already going to make can be another way to pad up your wallet. Just be sure you're not carrying a balance. A 20.13 percent interest rate will never outweigh the cash back.
Save for emergencies and find the right account: Historically, investing in the markets has been the best way to beat inflation, but higher rates mean savers can find a market-like return without any of the risk. Deposit rates have already fallen now that the Fed has cut rates, but returns on high-yielding accounts are still beating inflation. Stash your cash in a high-yield account or add a certificate of deposit (CD) to your portfolio, so you can lock in these elevated yields for the long haul.
Methodology
Bankrate analyzed 407 items from the Bureau of Labor Statistics' consumer price index (CPI) to determine how much specific items have increased in price on both a month-over-month basis, year-over-year basis and then on a pre-pandemic basis (defined as February 2020, when the coronavirus pandemic-induced recession was officially determined to have begun). Bankrate then ranked each item from slowest to fastest appreciation, focusing on the top and bottom 10 in each category, in addition to key aspects of Americans' budgets. When given the choice, Bankrate chose an item's seasonally adjusted index.
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