Key takeaways
- The current annual inflation rate is 2.3%, now the closest it’s been to the Federal Reserve’s 2% target since the post-pandemic inflation surge began in early 2021.
- Consumers pay more close attention to cumulative inflation, and prices are 23.6% 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 are taking a more cautious approach in 2025 as price pressures stay sticky and President Donald Trump’s tariff policies threaten to reignite inflation.
Inflation rose less than expected last month, suggesting that businesses might not have started to pass through President Donald Trump’s higher tariffs into the prices that you see on store shelves.
Eggs, airline fares, used cars and trucks, apparel prices and more declined last month, helping to keep inflation tamer than many economists were forecasting. Last month, consumer prices rose 0.2 percent, according to the Bureau of Labor Statistics (BLS)’ monthly consumer price index (CPI) report for April. Excluding food and energy, a measure of “core” or “underlying” inflation rose 0.2 percent.
Still, consumer prices are 23.6 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 $1,236 to buy the same goods and services that cost $1,000 when the coronavirus-induced recession occurred.
Price hikes could also still be coming down the pipeline, with tariffs higher today than they were at the start of Trump’s second term. The majority of economists (55 percent) expect inflation to stay elevated through 2027, driven by higher import taxes, according to Bankrate’s latest Economic Indicator Survey. Meanwhile, Fed Chair Jerome Powell said at the U.S. central bank’s May rate-setting meeting that uncertainty over how tariffs could impact inflation is the main reason rate cuts are on hold.
This report is significant for its timing, as it is the first month following the announcement of the tariffs. However, it doesn’t offer an honest reflection of how businesses may ultimately respond to higher costs throughout 2025.
— Stephen Kates, CFP, Bankrate 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 April hit 2.3 percent, down from 2.4 percent in March and the lowest since February 2021, the BLS’ CPI report showed. Excluding food and energy, “core” prices rose 2.8 percent from a year ago.
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.
Prices that are rising the most
Of the nearly 400 items that BLS tracks, almost 7 in 10 items (or 68 percent) increased in price between April 2024 and April 2025. Less than a third (or 31 percent) were cheaper in April than they were a year ago.
According to BLS, these are the prices that increased most over the past year:
| Item | April 2024-April 2025 increase |
|---|---|
| Eggs | 49.3% |
| Utility (piped) gas service | 15.7% |
| Instant coffee* | 13.5% |
| College textbooks* | 10.4% |
| Other condiments | 10.3% |
| Uncooked ground beef | 10% |
| Admission to sporting events | 9.3% |
| Roasted coffee | 9.1% |
| Subscription and rental of video and video games* | 9% |
| Uncooked beef roasts | 8.8% |
| *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 a jump in tax return preparation services costs in March. 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 | March 2025-April 2025 increase |
|---|---|
| Audio equipment | 8.8% |
| Other condiments | 8% |
| Car and truck rental | 4.3% |
| Utility (piped) gas service | 3.7% |
| Computer software and accessories* | 3.2% |
| Living room, kitchen and dining room furniture* | 2.4% |
| Roasted coffee | 2.4% |
| Instant coffee* | 2.3% |
| Photographic equipment and supplies | 2.2% |
| Vehicle parts and equipment, other than tires | 2.2% |
Why is inflation still hot right now?
Consumers might notice just how much more expensive egg prices are from a year ago and wonder why the overall inflation rate is just 2.3 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 more than three-fifths (62 percent) of the increase in inflation;
- Food has accounted for 16 percent of inflation; and
- Car insurance has accounted for 8 percent of inflation.
Excluding food, shelter and energy, inflation would’ve risen just 1.5 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 26 (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-April 2025 increase |
|---|---|
| Eggs | 115.4% |
| Frozen noncarbonated juices and drinks* | 59.8% |
| Margarine | 59.2% |
| Motor vehicle repair | 56.8% |
| Utility (piped) gas service | 56% |
| Motor vehicle insurance | 55.3% |
| Uncooked beef roasts | 50.2% |
| Other condiments | 46.9% |
| Uncooked, other beef and veal* | 45.9% |
| Repair of household items* | 45.2% |
| *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-April 2025 decrease |
|---|---|
| Smartphones* | -59.4% |
| Telephone hardware, calculators, and other consumer information items | -49% |
| Televisions | -30.5% |
| Information technology commodities | -26.6% |
| Education and communication commodities | -22.6% |
| Health insurance* | -15.7% |
| Other video equipment | -15.6% |
| Video and audio products | -13.9% |
| Dishes and flatware | -12.9% |
| Computer software and accessories* | -11.7% |
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 (2.3 percent as of March 2025, versus 2.4 percent in the same month for CPI). Excluding food and energy, “core” prices in March are up 2.6 percent from a year ago versus 2.8 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 Powell is warning that tariffs could reignite inflation.
- 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.
See how all items BLS regularly tracks have changed over time
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