Key takeaways
- The current annual inflation rate is 2.4%, less than half a percentage point above the Fed’s 2% target.
- Consumers pay more close attention to cumulative inflation, and prices are 23.3% 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 and President Donald Trump’s tariff policies threaten to reignite inflation.
Inflation unexpectedly cooled in March, suggesting that households may have been starting to feel some relief from the pain of higher prices right before President Donald Trump’s tariffs took effect.
Last month, consumer prices fell 0.1 percent, the first time in nearly five years that inflation has declined, according to the Bureau of Labor Statistics (BLS)’ monthly consumer price index (CPI) report for March. Excluding food and energy, a measure of “core” or “underlying” inflation rose 0.1 percent, the slowest pace since June.
Still, consumer prices are 23.3 percent more expensive than they were in February 2020, a Bankrate analysis of Bureau of Labor Statistics data shows. That price burst means Americans need about $1,233 to buy the same goods and services that cost $1,000 when the coronavirus-induced recession occurred.
The threat of higher prices or a weaker economy from tariffs, federal layoffs and elevated interest rates could put even more strain on households’ budgets. The majority of economists (55 percent) now expect that inflation could stay elevated through 2027, as tariffs likely lead to higher prices, according to Bankrate’s latest Economic Indicator Survey. Fed Chair Jerome Powell has already suggested that rate cuts at the U.S. central bank may now be on hold, even in the face of higher unemployment or weaker growth.
Stubbornly high inflation has kept the Federal Reserve on the sidelines, and the prospect of a further uptick could keep them there even if signs of economic weakness begin to materialize.
— Greg McBride, CFA, Bankrate chief financial analyst
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
What is the current inflation rate?
Over the past 12 months, the overall annual inflation rate in March hit 2.4 percent, down from 2.8 percent in February and matching the lows last seen in September, the BLS’ CPI report showed. Excluding food and energy, “core” prices hit a new post-pandemic low of 2.8 percent.
Inflation is well below where it peaked in the summer of 2022. Yet, the figures reflect bumpier progress on inflation’s path back to the Fed’s 2 percent target. Between October and January, inflation had been gaining steam again.
Prices that are rising the most
Of the nearly 400 items that BLS tracks, almost 7 in 10 items (or 69 percent) increased in price between March 2024 and March 2025. About 2 in 5 (or 43 percent) were cheaper in March than they were a year ago.
According to BLS, these are the prices that increased most over the past year:
| Item | February 2024-March 2025 increase |
|---|---|
| Eggs | 60.4% |
| Admission to sporting events | 25.8% |
| Instant coffee* | 13.2% |
| College textbooks* | 13% |
| Subscription and rental of video and video games* | 10.7% |
| Uncooked ground beef | 10.4% |
| Utility (piped) gas service | 9.4% |
| Uncooked beef roasts | 8.9% |
| Laundry equipment | 8.7% |
| Beef and veal | 8.6% |
| *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, tax season likely contributed to last month’s jump in tax return preparation services costs. 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 | February 2025-March 2025 increase |
|---|---|
| Tax return preparation and other accounting fees | 9.5% |
| Eggs | 5.9% |
| Care of the sick and elderly at home* | 4.9% |
| Women’s outerwear | 4.4% |
| Men’s shirts and sweaters | 4.3% |
| Newspapers and magazines* | 4% |
| Utility (piped) gas service | 3.6% |
| Subscription and rental of video and video games* | 3.2% |
| Uncooked ground beef | 3.1% |
| Bedroom furniture* | 2.7% |
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 2.4 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.
Over the past year:
- Shelter has accounted for almost three-fifths (60 percent) of the increase in inflation;
- Food has accounted for 17 percent of inflation;
- Car insurance has accounted for 9 percent of inflation; and
- Services has driven 98 percent of inflation.
Excluding food, prices would’ve increased 2 percent from a year ago, matching the Fed’s goalpost. Excluding food, shelter and energy, inflation would’ve risen just 1.6 percent.
The drivers of inflation have changed dramatically since the initial post-pandemic price burst. When price pressures peaked in June 2022, shelter contributed to 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 responsible for about a third (32 percent) of inflation, while food prices drove 15 percent of inflation. Goods, meanwhile, were driving the majority of price pressures, with commodities accounting for more than half (58 percent) of inflation between June 2021 and 2022.
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 25 (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-March 2025 increase |
|---|---|
| Eggs | 146.7% |
| Frozen noncarbonated juices and drinks* | 60.4% |
| Margarine | 57.3% |
| Motor vehicle repair | 55% |
| Motor vehicle insurance | 54.3% |
| Uncooked beef roasts | 50.5% |
| Utility (piped) gas service | 50.4% |
| Other fats and oils, including peanut butter | 46.2% |
| Repair of household items* | 45.2% |
| Uncooked, veal and other beef* | 43.5% |
| *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-March 2025 decrease |
|---|---|
| Smartphones* | -59.2% |
| Telephone hardware, calculators, and other consumer information items | -48.9% |
| Televisions | -29% |
| Information technology commodities | -26.8% |
| Education and communication commodities | -22.9% |
| Health insurance* | -16.1% |
| Video and audio products | -14.7% |
| Computer software and accessories* | -14.4% |
| Other video equipment | -14.1% |
| Dishes and flatware | -10.6% |
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
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 half a percentage point above the Fed’s target (2.5 percent as of February 2025, versus 2.8 percent in the same month for CPI). Excluding food and energy, “core” prices in February are up 2.8 percent from a year ago versus 3.1 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 in 2024 gave 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, and Fed Chair Jerome Powell sees price pressures “moving away” from the U.S. central bank’s target because of tariffs.
- So long as inflation stays high, so will the borrowing costs you pay: 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 percent interest rate will never outweigh the cash back.
- Save for emergencies and find the right account: Historically, investing in the stock market has been the best way to beat inflation over time, but higher rates mean savers can find a market-like return without any of the risk. Deposit rates have already fallen after the Fed’s rate cuts, 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.
