Inflation slowed less than expected in September — here are the prices rising most

Inflation is finally trending in the right direction after more than two years of the worst inflation crisis seen in a generation, but some items remain sticky.

On an annual basis, inflation in September hit a new three-year low of 2.4 percent, down from a 2.5 percent rate in August, according to the Bureau of Labor Statistics’ monthly consumer price index (CPI) report. Prices, however, still rose faster than most economists had expected for the month. Grocery prices between August and September jumped by the fastest monthly pace since January, while energy services rose for the first time in five months. Excluding food and energy, so-called core prices rose 3.3 percent, matching last month’s annual rate, thanks to higher airfares, apparel and car insurance prices. 

Still, inflation is much cooler than it was in the summer of 2022, when the U.S. economy was rebounding from the coronavirus pandemic. The Federal Reserve began dialing back interest rates from a 23-year high at its September meeting with a larger-than-expected half-point interest rate cut. They’re expected to continue cutting interest rates at future meetings to reduce just how much borrowing costs are restricting economic growth — though stickier inflation may keep them from cutting rates in larger increments.

Consumers may still feel the pinch of inflation. Since February 2020, consumer prices have increased 21.4 percent, a Bankrate analysis of Bureau of Labor Statistics data shows. That’s well above the historic average for a four-year period. For comparison, inflation rose 18.9 percent in the 2010s, 28.4 percent in the 2000s and 32.4 percent in the 1990s. The post-pandemic price burst means Americans would need about $1,214 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

What is the current inflation rate?

Inflation rose 2.4 percent in September from a year ago, meaning prices on an annual basis have now slowed for six straight months, the latest Bureau of Labor Statistics report showed. Excluding food and energy, core prices rose 3.3 percent in September, matching last month’s annual rate.

Taken together, the figures reflect a return to the disinflation that had been benefiting consumers and policymakers on the Federal Reserve in the second half of 2023. Inflation is also still well below its peak in June 2022, when it smashed 9.1 percent.

Prices that are rising the most

Of the nearly 400 items that BLS tracks, slightly more than 2 in 5 items (or 44 percent) increased in price between September 2023 and 2024.

According to BLS, these are the prices that increased most over the past year:

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, a jump in college textbooks for the first time since April could be attributed to back-to-school season. 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:

Why is inflation so high right now?

Consumers might look at the massive 39.6 percent 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, transportation services and motor vehicle insurance.

• Shelter accounted for almost three-quarters (or 72 percent) of the annual 2.4 percent increase in September.
• Food accounted for about 13 percent of inflation over the past 12 months. Between August and September, food prices contributed to 27 percent of the increase.
• Transportation services accounted for more than one-fifth (or 22 percent) of inflation over the past 12 months.
• Motor vehicle insurance is responsible for roughly 18 percent of the increase in inflation over the past 12 months.

Excluding food, prices would’ve increased about 2 percent from a year ago, in line with the Fed’s preferred 2 percent goalpost. Excluding energy and shelter in addition to food, inflation would’ve risen just 1.5 percent from a year ago.

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.

The changing drivers of inflation have evolved as much as the U.S. economy. 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.

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:

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

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.

• Gas

  Gasoline prices are 15.3 percent lower than they were a year ago, after jumping as much as 59.9 percent in June 2022. Yet, gas prices are still up 22.4 percent since the pandemic. Consumers have likely experienced some volatility at the pump.

  Energy prices tend to be volatile. Between March and April, for example, prices at the pump increased across all 50 states between March and April, AAA data showed. Then, between April and May, they dipped in every state except Colorado. Over the past month, gas prices have risen across 13 states.

• Food

  Grocery prices (formally known as food at home) rose 1.3 percent from a year ago and are 25.8 percent more expensive than they were before the pandemic, BLS data indicates. At their peak, grocery prices soared 13.5 percent in July 2022 from a year ago.

  Of the major shopping categories:

  • Meats: up 2.5 percent over the past year and 28.2 percent since February 2020
  • Fish and seafood: down 1.3 percent from a year ago but still up 15.7 percent since the start of the pandemic-induced recession
  • Dairy: up 0.5 percent over the past year and 19.8 percent more expensive since the pandemic
  • Fruits and vegetables: down 0.7 percent over the past year and 18.4 percent more expensive than before the pandemic
  • Sugar and sweets: up 0.8% percent from a year ago and 28.2 percent since the pandemic

  Meanwhile, the price of dining out (formally known as full service meals and snacks) increased 3.9 percent from a year ago, capping off a 28.2 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.

  Rent of primary residence in August jumped 4.8 percent from a year ago, BLS data shows. On a monthly basis, rents rose 0.3 percent after rising 0.4 percent the prior month. Shelter prices more broadly rose 4.8 percent, the slowest pace since early 2022.

  Even so, Americans who’ve had to sign new leases since the outbreak are feeling the pinch: Rent is up 24.8 percent since the pandemic.

  Real-time measures show that rents aren’t rising as quickly as they were at the height of post-pandemic lockdowns, though a sharper slowdown hasn’t yet been reflected in the official BLS monthly report. 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 — 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 are finally starting to level off, though elevated demand for travel could put upward pressure on those prices at any time.

  • Airfares: up 1.6 percent from a year ago and 4.5 percent cheaper since February 2020
  • Car and truck rental: down 6.8 percent from a year ago but up 19.1 percent since the pandemic
  • Hotels and motels (lodging away from home): down 3.7 percent from last year but 10.2 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 16.3 percent from a year ago and 51.6 percent since the start of the pandemic in 2020
  • Vehicle repair: up 6 percent from a year ago and 48.7 percent since February 2020
  • New vehicles: down 1.3 percent from a year ago but still 19.3 percent more expensive since February 2020
  • Used vehicles: down 7.5 percent since September 2023 but 23.5 percent more expensive
  • Leased vehicles: up 1.4 percent in September from a year ago but 38.5 percent more expensive since the start of the pandemic

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 rising two-tenths of a percentage point above the Fed’s target in July — compared to last month’s hotter 2.5 percent increase in CPI.

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.

Takeaways for consumers

Slowing inflation gives 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.

Meanwhile, how much the Fed cuts interest rates depends on how quickly price pressures retreat back to the Fed’s ultimate 2 percent target — and also how much economic growth holds up. Hiring has weakened and labor demand has cooled. In July, the ratio of job openings per every unemployed worker hit the lowest since before the pandemic.

• Even when the Fed cuts interest rates, borrowing costs are bound to remain historically high: Even with the Fed’s larger-than-expected half-point interest rate cut, the Fed’s key benchmark interest rate is the highest since before the financial crisis — 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 20.55 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 is cutting 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

• Methodology

  Bankrate analyzed 380 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.