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Inflation accelerated again last month — here are the prices rising most

Written by Edited by
Published on February 12, 2025 | 7 min read

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Images by Getty Images; Illustration by Issiah Davis/Bankrate

Key takeaways

  • 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 FedWatch tool.

Just like consumers, the Federal Reserve wants to see further cooling of inflation. It is hard to make the case for a rate cut at this point. — Mark Hamrick, Bankrate senior economic analyst

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.

Highlights of the latest statistics on inflation

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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).

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Current core inflation rate

Excluding food and energy, prices rose 3.3% in January, edging up from last month’s 3.2% rate.

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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%).

What is the current inflation rate?

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.

Prices that are rising the most

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

Month-over-month price changes, however, can give consumers a more real-time look at the prices that have recently been popping — or slowing. Lower prices in the same year-ago period, for example, can cause an item to look like it’s gaining speed, when it’s slowing in reality.

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%

Why is inflation still hot right now?

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.

Post-pandemic inflation: What’s risen the most and what’s gotten cheaper

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

Meanwhile, the items that have dropped in price the most since the pandemic are primarily goods and electronics — largely thanks to improving supply chains.

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%

Inflation breakdown by product category

Looking for an easy analysis of how inflation is impacting the key items in your budget? Here’s what Bankrate found.

The different methods of measuring inflation: PCE versus CPI

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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.

Takeaways for consumers

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.

See how all items BLS regularly tracks have changed over time