The consumer price index, the top measure for inflation in the U.S., increased 3% in the 12-month period ending in January, which was up from 2.9% in December. The Bureau of Labor Statistics released the updated consumer price index on Wednesday.
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.
For January alone, the price of goods and services increased by 0.5%. This was driven by a 1.1% increase in energy prices throughout the month.
January 2025 marked the largest month over month increase in the consumer price index since August 2023.
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Although the rate of inflation started increasing late in 2024, the year as a whole had lower inflation than in previous years. The year 2023 ended with an inflation rate of 3.4%, while 2022 had an inflation rate of 6.5% and 2021 had an inflation rate of 7.0%.
In the last decade, prices generally increased at a rate of 3.2% per year. In the last 20 years, consumer inflation has generally increased by 3% annually. But the Federal Reserve has aimed to keep annual inflation right at 2%.
Month over month, food prices increased 0.4% in January alone, and 2.5% year over year. Egg prices notably increased 15.2% throughout the month, and ended January 53% more expensive than a year earlier.
The new data comes as President Donald Trump has implemented 25% tariffs on steel and aluminum imports into the U.S. It is unclear what, if any, impact these tariffs will have on consumer prices.
Are wages keeping up with inflation?
Wages slightly outpaced inflation, meaning the typical American gained back some of the buying power lost in 2021 and 2022.
U.S. workers were making 4.1% more per hour in January than at the start of 2024. Workers were also earning 3.8% more per week at the start of 2025 compared to a year prior.
