Consumer Price Index in the US

Key findings:

• The US Consumer Price Index rose 24.8% between Jan 2020 and Aug 2025, highlighting steady growth in living costs.
• Inflation peaked at 9.1% in June 2022, the highest monthly rate in four decades, before easing through 2023-2024.
• By late 2024, inflation slowed to 2.87% after the sharp 2022 surge.
• Long-term CPI history shows dramatic spikes in the 1970s-1980s and post-pandemic era.
• Federal Reserve forecasts predict inflation will moderate to 2.0% by 2028, aligning with long-term targets.

In recent years, inflation has become a central subject in both financial reporting and economic analysis. Prices for groceries, housing, transportation, and services are constantly changing, and it can be hard to understand what’s driving the cost of living. In this article, we’ll explore how the Consumer Price Index (CPI) in the U.S. has evolved over the decades, how inflation peaked in 2022, how it has declined through 2023-2024, and what to expect in the near future.

We’ll not only look at the overall numbers but also break down how inflation affects your daily expenses, from food to transportation. Plus, we’ll provide forecasts and expert estimates to help you plan your budget and better understand economic trends. This guide is useful both for those interested in finance and for anyone who wants to see where their money really goes.

Understanding the Consumer Price Index (CPI)

Inflation can feel abstract, but the Consumer Price Index (CPI) is one of the clearest ways to measure it. So, what is CPI-U? CPI-U stands for the Consumer Price Index for All Urban Consumers, which tracks the average change over time in prices paid by urban households for a standard set of goods and services.

What is included in the CPI basket?

Many people wonder what is included in the CPI basket. This basket contains categories such as housing, transportation, food and beverages, medical care, and other goods and services. By monitoring the prices of these items, the CPI reflects changes in the cost of living.

How to find the consumer price index?

If you’re curious about how to find the consumer price index, the U.S. Bureau of Labor Statistics (BLS) publishes monthly CPI data, including detailed reports on the prices of specific categories. You can also calculate it manually by comparing the total cost of the basket in one period to a base period.

A consumer price index example can make this clearer. Suppose the basket of goods costs $1,000 in the base year and $1,050 in the subsequent year. The CPI would indicate a 5% price increase, signaling inflation. This shows why the consumer price index is such a vital tool for understanding economic trends and their impact on everyday life.

What happens when CPI decreases

It’s also important to know what happens when CPI decreases. A falling CPI may indicate deflation, which can reduce purchasing power, affect wages, and influence monetary policy decisions.

The consumer price index example shows the distribution of weights for different categories in the CPI basket. These weights indicate the relative importance of each category in measuring overall price changes. For instance, housing accounts for 44.2% of the total index, while apparel represents just 2.0%.

Data taken from: Statista – https://www.statista.com/chart/31266/composition-of-the-consumer-price-index/?srsltid=AfmBOoqGv6zbDLG-jRSl-FC8gJuzZP2KCUDY1NlcB8wImlne74gG0Bxb¹

• Housing has the largest CPI weight at 44.2%, making it the most influential category.
• Transportation and food and beverages account for 16.6% and 14.5% of the CPI, respectively.

CPI breakdown

Data taken from: Statista – https://www.statista.com/chart/31266/composition-of-the-consumer-price-index/?srsltid=AfmBOoqGv6zbDLG-jRSl-FC8gJuzZP2KCUDY1NlcB8wImlne74gG0Bxb¹

The data illustrate how the CPI is a weighted measure of consumer expenses across various categories. Larger weights, such as housing and recreation, drive most changes in the index, while smaller categories contribute less to overall inflation. Understanding these weights helps explain why certain price changes have a more significant effect on the consumer price index and why monitoring CPI-U is essential for interpreting inflation trends.

After understanding how the consumer price index measures changes in the cost of goods and services, we can now examine overall inflation and price index growth in the US since 2020.

Overall inflation and price growth since 2020

The graph presents the consumer price index from January 2020 to August 2025, with 1/1/2020 as the base (100). It highlights how current inflation and inflation by month since 2020 have contributed to steady increases in prices. For instance, the CPI rose from 100.0 in January 2020 to 124.8 in August 2025, reflecting cumulative growth across various sectors.

Data taken from: FRED –  https://fred.stlouisfed.org/series/CPIAUCSL²

• From January 2020 to December 2021, the CPI increased from 100.0 to 108.4, indicating an 8.4% rise over two years.
• The CPI index peaked at 115.3 in December 2022, marking the highest annual increase since the start of 2020.
• By August 2025, the CPI reached 124.8, showing a total growth of 24.8% since January 2020.

How consumer prices have risen since 2020

Date	CPI index (1/1/2020 = 100)
1/1/2020	100.0
2/1/2020	100.0
3/1/2020	99.6
4/1/2020	98.8
5/1/2020	98.7
6/1/2020	99.2
7/1/2020	99.7
8/1/2020	100.1
9/1/2020	100.3
10/1/2020	100.5
11/1/2020	100.7
12/1/2020	101.1
1/1/2021	101.4
2/1/2021	101.7
3/1/2021	102.2
4/1/2021	102.9
5/1/2021	103.6
6/1/2021	104.5
7/1/2021	105.0
8/1/2021	105.3
9/1/2021	105.7
10/1/2021	106.7
11/1/2021	107.6
12/1/2021	108.4
1/1/2022	109.0
2/1/2022	109.8
3/1/2022	110.9
4/1/2022	111.4
5/1/2022	112.4
6/1/2022	113.9
7/1/2022	113.8
8/1/2022	113.9
9/1/2022	114.4
10/1/2022	115.0
11/1/2022	115.3
12/1/2022	115.3
1/1/2023	115.9
2/1/2023	116.3
3/1/2023	116.4
4/1/2023	116.9
5/1/2023	117.1
6/1/2023	117.4
7/1/2023	117.6
8/1/2023	118.1
9/1/2023	118.6
10/1/2023	118.7
11/1/2023	118.9
12/1/2023	119.1
1/1/2024	119.6
2/1/2024	120.0
3/1/2024	120.4
4/1/2024	120.8
5/1/2024	120.8
6/1/2024	120.8
7/1/2024	121.0
8/1/2024	121.2
9/1/2024	121.5
10/1/2024	121.8
11/1/2024	122.1
12/1/2024	122.6
1/1/2025	123.1
2/1/2025	123.4
3/1/2025	123.3
4/1/2025	123.6
5/1/2025	123.7
6/1/2025	124.1
7/1/2025	124.3
8/1/2025	124.8

Data taken from: FRED – https://fred.stlouisfed.org/series/CPIAUCSL²

The data clearly demonstrates how consumer price index values have steadily risen over the past five and a half years. While growth was moderate in 2020-2021, inflation accelerated in 2022, reflecting increased inflation in consumer prices, before moderating slightly in 2023-2025. Tracking the price index over time provides insight into the overall trend of rising costs for households and highlights the importance of monitoring current inflation for economic planning.

Building on the overall price growth since 2020, we can now focus on the inflation peaks in 2022 to understand when consumer prices reached their highest levels.

Inflation peaks in 2022: monthly trends

The graph illustrates monthly inflation rate changes in 2022, highlighting periods of rapid price increases. The highest inflation occurred in June, when the rate reached 9.1%, reflecting the rising costs in key sectors such as the basket of goods 2022 and the retail price index 2022. These trends underscore the influence of the inflation basket of goods in 2022 on overall price dynamics. Here, inflation is shown as a percent change from the year ago, meaning each month’s rate compares prices to the same month in the previous year.

Data taken from: Trading Economics – https://tradingeconomics.com/united-states/inflation-cpi³

• Inflation increased from 7.5% in January to a peak of 9.1% in June, marking the largest monthly increase of the year.
• The rate remained elevated at 8.5% in July, showing a persistent high CPI 2022 by month.
• By December, inflation had declined to 6.5%, indicating the beginning of a slowdown after the 2022 peak.

How prices increased in 2022

Month	Inflation rate, %
Jan	7.5%
Feb	7.9%
Mar	8.5%
Apr	8.3%
May	8.6%
Jun	9.1%
Jul	8.5%
Aug	8.3%
Sep	8.2%
Oct	7.7%
Nov	7.1%
Dec	6.5%

Data taken from: Trading Economics – https://tradingeconomics.com/united-states/inflation-cpi³

Consumer price index growth reached its highest level in decades. The peak in June reflects widespread upward pressure across multiple categories, and the gradual decline toward the end of the year suggests that some stabilization occurred. Understanding these monthly changes provides insight into the timing and magnitude of price shocks experienced by consumers throughout 2022.

After examining the sharp inflation peaks in 2022, it is important to look at the subsequent inflation trend by month and the gradual decline in US CPI during 2023-2024.

Recent trends and decline in inflation (2023-2024)

The graph displays the CPI YoY change from January 2023 through December 2024, highlighting the easing of inflation after the 2022 surge.

Data taken from: FRED – https://fred.stlouisfed.org/series/CPIAUCSL²

• Inflation decreased from 6.34% in January 2023 to 3.32% by December 2023, showing a rapid easing in less than one year.
• The lowest point in 2024 was 2.43% in September, indicating that the inflation rate in 2024 continued to moderate.
• By December 2024, inflation rose slightly to 2.87%, suggesting a stabilization of CPI after a period of decline.

How inflation decreased after the 2022 peak

Date	CPI YoY, %
1/1/2023	6.34%
2/1/2023	5.96%
3/1/2023	4.93%
4/1/2023	4.95%
5/1/2023	4.13%
6/1/2023	3.06%
7/1/2023	3.28%
8/1/2023	3.72%
9/1/2023	3.70%
10/1/2023	3.25%
11/1/2023	3.14%
12/1/2023	3.32%
1/1/2024	3.11%
2/1/2024	3.17%
3/1/2024	3.47%
4/1/2024	3.35%
5/1/2024	3.24%
6/1/2024	2.97%
7/1/2024	2.94%
8/1/2024	2.61%
9/1/2024	2.43%
10/1/2024	2.57%
11/1/2024	2.71%
12/1/2024	2.87%

Data taken from: FRED – https://fred.stlouisfed.org/series/CPIAUCSL²

The graph demonstrates that CPI in March 2023 and subsequent months reflects a significant moderation in inflation compared to the 2022 peak. The gradual decline in the consumer price index year-over-year shows that price pressures have eased but remain positive.

Building on recent trends, examining historical CPI provides insight into how the US inflation historical patterns have shaped the economy over the last five decades.

Historical context and long-term shifts in inflation from 1970 to 2024

The graph presents CPI YoY, % from 1970 through 2024, highlighting key periods of rising and declining inflation. Observing CPI history by years reveals long-term shifts, including high inflation in the late 1970s and early 1980s and the moderation that followed in subsequent decades. In this case, the data is expressed as an index with 1982-1984 = 100 as the base, meaning price levels in that period are set to 100 and all subsequent values are scaled accordingly. This index format allows us to track inflation consistently over time and compare today’s price levels with those of previous decades.

Data taken from: FRED – https://fred.stlouisfed.org/series/CPIAUCSL²

• Inflation reached a historical high of 19.9% in January 2022, marking the peak of recent price surges (based on CPI index with 1982–1984 = 100).
• The late 1970s experienced extreme inflation, with 9.0% in December 1979, one of the highest peaks in the 20th century.
• Another notable spike occurred in June 2021 at 13.7%, reflecting a rapid acceleration during the post-pandemic recovery period.

The historical data highlights significant variability in CPI history, from moderate rates in the 1970s to sharp spikes in the early 1980s and the significant rise in 2021. Tracking inflation historical patterns emphasizes both the cyclical nature of inflation and periods of stabilization, helping contextualize the current CPI and understand long-term economic trends.

While historical and monthly CPI trends provide a macroeconomic perspective, it’s crucial to understand how inflation by category affects households, influencing the cost of living in the USA.

Impact of inflation on everyday life and vice versa

The chart illustrates how major categories (Housing, Transportation, Food and beverages, and other) contribute most to the overall inflation from January 2021 through August 2025.

Data taken from: USAFacts – https://usafacts.org/answers/what-are-the-biggest-drivers-of-inflation-in-the-past-year/country/united-states/⁴

• Housing contributed the most to inflation in 2022, adding up to 3.4 percentage points to the overall rate by December, underscoring the heavy burden on renters and homeowners.
• Transportation made its largest contribution in March 2022 at 3.7 percentage points, driven by higher fuel and vehicle prices.
• Food and beverages steadily raised inflation, contributing 1.6 percentage points in August 2022, highlighting the effect of supply chain pressures on everyday meals.
• “All other” categories consistently added less than 1.1 percentage points, showing that discretionary spending had a smaller role in overall inflation.

Cost of living inflation: impacts by category

Month	Housing	Transportation	Food and beverages	All other
1/1/2021	0.8%	-0.2%	0.5%	0.3%
2/1/2021	0.8%	0.1%	0.5%	0.3%
3/1/2021	0.9%	0.9%	0.5%	0.3%
4/1/2021	1.1%	2.2%	0.4%	0.6%
5/1/2021	1.2%	2.9%	0.3%	0.6%
6/1/2021	1.3%	3.2%	0.4%	0.5%
7/1/2021	1.4%	2.9%	0.5%	0.5%
8/1/2021	1.5%	2.7%	0.6%	0.6%
9/1/2021	1.6%	2.5%	0.7%	0.6%
10/1/2021	1.9%	2.8%	0.8%	0.7%
11/1/2021	2.0%	3.2%	0.9%	0.7%
12/1/2021	2.1%	3.2%	0.9%	0.8%
1/1/2022	2.4%	3.2%	1.0%	0.9%
2/1/2022	2.5%	3.3%	1.1%	1.0%
3/1/2022	2.7%	3.7%	1.2%	0.9%
4/1/2022	2.7%	3.3%	1.3%	0.9%
5/1/2022	2.9%	3.3%	1.4%	0.9%
6/1/2022	3.1%	3.5%	1.4%	1.1%
7/1/2022	3.1%	2.9%	1.5%	1.0%
8/1/2022	3.3%	2.4%	1.6%	1.1%
9/1/2022	3.4%	2.2%	1.5%	1.1%
10/1/2022	3.3%	2.0%	1.5%	0.9%
11/1/2022	3.3%	1.4%	1.5%	0.9%
12/1/2022	3.4%	0.7%	1.4%	0.9%
1/1/2023	3.5%	0.7%	1.4%	0.8%
2/1/2023	3.5%	0.5%	1.3%	0.7%
3/1/2023	3.3%	-0.2%	1.2%	0.7%
4/1/2023	3.2%	0.0%	1.1%	0.7%
5/1/2023	2.9%	-0.4%	0.9%	0.6%
6/1/2023	2.7%	-1.1%	0.8%	0.6%
7/1/2023	2.6%	-0.6%	0.7%	0.5%
8/1/2023	2.5%	0.2%	0.6%	0.4%
9/1/2023	2.4%	0.4%	0.5%	0.4%
10/1/2023	2.3%	0.1%	0.5%	0.4%
11/1/2023	2.3%	0.1%	0.4%	0.3%
12/1/2023	2.1%	0.5%	0.4%	0.4%
1/1/2024	2.1%	0.3%	0.4%	0.4%
2/1/2024	2.0%	0.4%	0.3%	0.4%
3/1/2024	2.1%	0.6%	0.3%	0.5%
4/1/2024	2.0%	0.6%	0.3%	0.5%
5/1/2024	2.0%	0.5%	0.3%	0.5%
6/1/2024	2.0%	0.2%	0.3%	0.5%
7/1/2024	1.9%	0.1%	0.3%	0.5%
8/1/2024	1.9%	-0.2%	0.3%	0.5%
9/1/2024	1.8%	-0.2%	0.3%	0.5%
10/1/2024	1.9%	0.0%	0.3%	0.5%
11/1/2024	1.8%	0.1%	0.3%	2.7%
12/1/2024	1.8%	0.3%	0.4%	0.5%
1/1/2025	1.7%	0.5%	0.4%	0.4%
2/1/2025	1.7%	0.3%	0.4%	0.4%
3/1/2025	1.6%	-0.1%	0.4%	0.5%
4/1/2025	1.8%	-0.2%	0.4%	0.4%
5/1/2025	1.8%	-0.2%	0.4%	0.4%
6/1/2025	1.8%	0.0%	0.4%	0.5%
7/1/2025	1.7%	0.0%	0.4%	0.5%
8/1/2025	1.8%	0.2%	0.4%	0.5%

Data taken from: USAFacts – https://usafacts.org/answers/what-are-the-biggest-drivers-of-inflation-in-the-past-year/country/united-states/⁴

The data highlights that essential living costs (housing, transportation, and food) contribute the largest share to overall inflation, while discretionary categories add much smaller portions. Understanding cost-of-living inflation in terms of contributions helps households plan budgets, anticipate spending shifts, and adjust to changes in consumer prices.

Inflation forecasts and CPI estimates

As the economy adapts to recent price fluctuations, analysts and policymakers focus on forecasted CPI trends to anticipate future inflation. The Federal Reserve Board and Federal Reserve Bank presidents provide projections of PCE (Personal Consumption Expenditures) inflation, reflecting expectations under current and potential monetary policies. These estimates are crucial for businesses, investors, and households trying to plan for future costs.

Data taken from: Board of Governors of the Federal Reserve System – https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20250917.htm⁵

• Inflation is expected to moderate gradually, declining from 3.0% in 2025 to 2.0% by 2028, reflecting the Fed’s efforts to stabilize prices.
• These projections indicate a return toward the long-term target of near 2%, aligning with historical trends.

CPI trend and economic expectations

Year	PCE inflation, %
2025	3.0%
2026	2.6%
2027	2.1%
2028	2.0%

Data taken from: Board of Governors of the Federal Reserve System – https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20250917.htm⁵

Understanding CPI estimates and forecasted inflation trends equips policymakers and consumers to make informed financial decisions. While short-term fluctuations may persist, projections indicate a stabilizing economic environment in the years to come.

Conclusions

• In 2025, the U.S. Consumer Price Index was almost 25% higher than in 2020, showing how quickly the cost of living can change in just a few years. This rise illustrates how inflation directly affects household budgets, from rent and groceries to transportation.
• The inflation surge of 2022, with a peak of 9.1% in June, was the steepest in over forty years. For many families, this meant sudden increases in everyday expenses, forcing difficult choices on savings, debt, and lifestyle adjustments.
• By the end of 2024, inflation had slowed to under 3%, suggesting the economy was stabilizing. Yet essential categories like housing, which make up 30.1% of the CPI basket, continued to strain family finances, proving that even “moderate” inflation can feel heavy in practice.
• Looking back at CPI history, patterns reveal that inflation is cyclical, rising in the late 1970s, calming in later decades, and spiking again after the pandemic. Recognizing these cycles helps place today’s challenges in a broader context and reminds us that both high and low inflation periods repeat over time.
• Different spending categories do not move equally, and that matters. Essentials such as housing, food, and transport drive the strongest impact on consumers, while discretionary items like leisure and culture remain relatively stable, shaping how households experience inflation unevenly.
• Looking ahead, Federal Reserve forecasts show inflation gradually falling to 2.0% by 2028. This offers hope for stability, but it also highlights the importance of monitoring price trends closely, since even small deviations can reshape family budgets and influence national policy debates.

Sources

1. Richter, Felix. “Infographic: The Components of the Consumer Price Index.” Statista Daily Data, 16 July 2025, https://www.statista.com/chart/31266/composition-of-the-consumer-price-index. Accessed 18 September 2025.
2. “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average.” FRED Homepage, 11 Sept. 2025, https://fred.stlouisfed.org/series/CPIAUCSL. Accessed 18 September 2025.
3. “United States Inflation Rate.” Trading Economics, https://tradingeconomics.com/united-states/inflation-cpi. Accessed 18 September 2025.
4. “What Are the Biggest Drivers of Inflation in the Past Year? | USAFacts.” USAFacts, https://usafacts.org/answers/what-are-the-biggest-drivers-of-inflation-in-the-past-year/country/united-states/.  Accessed 18 September 2025.
5. “September 17, 2025: FOMC Projections Materials, Accessible Version.” Board of Governors of the Federal Reserve System, 17 Sept. 2025, https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20250917.htm. Accessed 18 September 2025.