If inflation is making your wallet lighter and your stress higher, USAFacts has an explainer to help you make sense of it all.

For background, USAFacts is a nonprofit, nonpartisan organization that analyzes government data to make it easier for citizens to get answers to their questions.

Inflation definitions

Inflation is how fast the cost of goods and services goes up over time. That increase means the purchasing price of the dollar drops. The rate of inflation is how fast all those prices go up.

Typically, the U.S. measures inflation using the Consumer Price Index. The CPI tracks price fluctuations for everyday living expenses using two metrics:

  • Headline inflation — The actual spending habits of a typical U.S. consumer, including things like housing, food, transportation, energy costs, etc.
  • Core inflation — Excludes food and energy costs since factors like the weather, legislative changes, supply chain issues, etc., can cause a lot of volatility.

What’s inflation at now?

Last month, inflation was at 3%. When seasonally adjusted, it was up 0.5% and has gone up 3% in the past year. The highest recent inflationary rate was 9.1% in June 2022.

The biggest driver of inflation in the past year has been housing.

But why is everything so expensive?

USAFacts says it best: “Prices don’t decrease when inflation slows — they just rise at a slower rate.

“For example, if an item cost $100 in December 2021, it would cost $106.47 in December 2022 after a 6.5% increase. By December 2023, the inflation rate had fallen to 3.4%, and that item would cost $110.03. In December 2024, it would cost $113.03.

“Looking beyond the year-over-year change, we were recently amid the most inflationary period in decades. The CPI change over four years was higher in May 2024 than in any month since the 1980s. The five-year rate hit a high in 2024 that hasn’t been seen since 1993.”

Learn more

If you’d like to learn more about inflation — including historic trends — check out USAFacts recent article about inflation. You can also visit the U.S. Bureau of Labor Statistics for raw data. And for businesses, one of our shareholders, Mark Lyons, talked about ways to fight inflation back in 2022, and a lot of the advice still holds.