The Labor Department released new inflation numbers on Tuesday and the headline was good. Inflation rose 3.2% from a year ago, or .4% from the prior month. That’s slightly ahead of forecasts, but it’s much better than numbers from 2022 when inflation peaked at 8.6% in May.
And yet, inflation isn’t consistent across all areas that hit your pocketbooks. For example, in recent years food price gains have often far surpassed inflation, which consumers quickly feel the pain of.
Let’s dive into an analysis of new inflation numbers, and look at one industry inflation is still roaring in (prices rising at 20.6%!) that you’re probably feeling the pinch from.
Areas Where Prices Are Actually Dropping (No Inflation)
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The Labor Department tracks CPI (the consumer price index) across a number of categories. Particular focus is put on categories like food, energy, and services.
So, a category tracked would be college tuition, which might not impact all consumers. However, factors like housing and rent inflation almost universally affect consumers. Let’s start our look at inflation with categories that are actually seeing prices drop.
Eggs
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- Price Change from Last Year: -17%
While egg prices are down 17% from last February, they did rise 5.8% from last month. Some good news: the Labor Department tracks baskets of food like “Meats, poultry, fish, and eggs” that saw just 0.1% growth from January.
Rental Cars
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- Price Change from Last Year: -10%
If you’re looking to rent a car, it’s a lot cheaper than last year! However, once again our enthusiasm for price drops in car rentals from last year is tempered by the fact car rental prices rose 3.8% from January to February.
Toys
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- Price Change from Last Year: -6.2%
Parents (and grandparents!) of the world, prepare to spoil your children! Toys prices dropped 6.2% from last year. Best of all, toys keep getting cheaper, with prices dropping another .3% from January.
Airline Fares
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- Price Change from Last Year: -6.1%
Flying got very expensive after Covid when airlines cut routes and demand soared. Thankfully, airline fares declined 6.1% from last year. However, airline fares did jump 3.6% from January, so prices could be on the rise again.
Appliances
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- Price Change from Last Year: -5.2%
Appliances is another category that during Covid had supply shortages and saw prices skyrocket. Thankfully, appliance prices are now declining. Laundry equipment prices dropped 11.3% from last year and major appliance prices dropped 7.6%. If you need to replace items in your house, now might be a good time with dishes and flatware prices dropping 6.2% and lamp prices down 3% as well.
Gasoline
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- Price Change from Last Year: -3.9%
Gasoline prices across all types dropped 3.9% in February. Motor fuel dropped even more at 4.2% Energy price inflation isn’t all positive as electricity prices increased 3.6%, but there are some bright spots like gas services from utilities, which saw prices drop 8.8% from last year.
Used Vehicles
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- Price Change from Last Year: -1.8%
Remember how crazy the price of used cars got during Covid? With supply chains frozen and fewer new cars making it to dealerships, the price of used cars skyrocketed to historic rates. Thankfully, the price of used cars is now falling, down 1.8% from last year.
Areas Where Prices Are Rising (Inflation Is Still Here)
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As we noted earlier, overall inflation stands at 3.2%. That’s still higher than the Federal Reserve’s 2% target, so anything above that rate still feels “overheated.” Let’s look at some areas where inflation has yet to be tamed.
Haircuts
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- Price Change from Last Year: 3.9%
You’ll see a lot of items with persistent inflation that are largely a passthrough of labor costs. Haircut and other personal care service costs rose 3.9% from last year and their prices continue rising with a .3% jump from January.
Food Away from Home (Restaurants)
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- Price Change from Last Year: 4.5%
If you’re bemoaning the cost of dining out – we’ve got bad news. The cost of ‘Food Away from Home’ rose 4.5% from last year even though the cost of ‘Food at Home’ only rose 1%. The culprit is likely rent and wage pressures at restaurants. The bottom line is that it’s getting more expensive to eat at restaurants at a fast rate while the cost of eating at home has stabilized.
Dry Cleaning
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- Price Change from Last Year: 4.7%
If you’re working remote now, dry cleaning costs might not be something you notice, but they are rising. Laundry and dry cleaning services rose at a 4.7% rate from last year. Apparel services other than laundry and dry cleaning (think things like tailoring) also rose at a 4.7% rate as well.
Tomatoes
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- Price Change from Last Year: 4.7%
The price of tomatoes is rising, but it’s to all bad news. Other similar food items like potatoes (-2.3%), lettuce (-6.1%), bananas (-2.1%), and apples (-9.7%) are actually seeing their prices fall. While some foods are seeing inflation, the overall pace of price growth in foods has slowed.
Day Care and Preschool
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- Price Change from Last Year: 5.5%
If you’re a parent the inflation in this category hurts. Yet, the main cost of day care is paying workers to watch kids, so its not surprising inflation continues running higher in this category. One concerning note for parents is that daycare costs rose .8% from just January. This signals inflation in day care costs could be accelerating.
Candy and Chewing Gum
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- Price Change from Last Year: 5.8%
While the price of many fruits like bananas and apples is decreasing, the prices of treats is still seeing heavy inflation. The category of ‘Sugar and Sugar Substitutes’ has prices rising at 6.1% from last year while candy and chewing game is rising at 5.8%.
One ominous sign for this category is that candy prices rose 1.4% from just last month, so inflation in this category may be accelerating.
Rent
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- Price Change from Last Year: 5.8%
This is a big source of inflation. Rent is increasing at a 5.8% rate. Simply put, not all expenses are created equal, and what people spend on rent is a lot more than other categories. So if rent is increasing at 5.8%, it’s going to keep inflation running at a much higher rate than the Fed’s target of 2%.
Hair, Dental, and Shaving Products
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- Price Change from Last Year: 5.9%
Hair, dental, and shaving products saw a robust 5.9% rise in prices from last year in February. One positive note is that other categories of personal care like cosmetics saw their prices only rise about 2%, which is a healthy level of price increases.
Garbage and Trash Collection
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- Price Change from Last Year: 6.1%
Garbage and trash collection is another industry that is heavily influenced by labor costs, so it’s not surprising to see costs rising. Garbage and trash collection rose at a 6.1% rate from last February. Another category homeowners pay for that increased at a high rate is ‘Water and Swerage Maintenance,’ which saw prices rise 5% from last year.
Hospital Services
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- Price Change from Last Year: 6.1%
Here’s some good news: the broad category of ‘Medical Care Services’ only increased 1.1% from last year. Unfortunately, the cost of hospital services increased at a much higher rate, growing 6.1% from last year.
Motor Vehicle Maintenance and Repair
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- Price Change from Last Year: 6.7%
While the price of used cars is dropping, not all car costs are free from inflation. Motor vehicle maintenance and repair rose 6.7% from last year. The costs of servicing cars is highly dependent on labor, and a tight job market is pushing wages and resulting repair bills north at a steep pace.
Beef and Veal
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- Price Change from Last Year: 7.4%
Inflation in the price of meats now stands at 2.8%, which is actually below the overall rate of inflation. Yet, the price of beef is on the rise. The price of uncooked ground beef is up 5.9% from last year, uncooked beef roasts are up 9.2%, and uncooked beef steak is up 8.1%
Some positives? Pork prices are down 1.6% and poultry is up just .2%. While beef prices continue surging, the price of other meats isn’t rising at such a steep pace.
Baby Food and Formula
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- Price Change from Last Year: 8.8%
Parents are seeing price increases across a number of categories. Beyond day care’s 5.8% price jump from last year, baby formula costs are also rising fast. The price jumps in baby food and formula aren’t slowing down either. From January to February, they grew .7% in just a month.
Tax Returns and Accounting Services
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- Price Change from Last Year: 9.8%
It’s March, which means it’s time to start thinking about your taxes. Unfortunately filing your taxes may be significantly more expensive this year. Tax returns and accounting service costs grew 9.8% from last year. Once again, it’s a field that’s highly dependent on labor costs and a tight job market is pushing prices north.
Motor Vehicle Insurance
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- Price Change from Last Year: 20.6%
And we finally reach the big one. The one measure of inflation where prices are surging at the highest rates: motor vehicle insurance. Why is motor vehicle insurance rising by so much? Well, insurers claim they lost about 10% on premiums last year thanks to rising car costs and increased natural disasters. If insurers are losing money on premiums, that leads to an industry dynamic where prices need to rise aggressively.
Most worrying is that the price of car insurance premiums notably picked up in February, growing .9% from the prior month. One final note is that it’s not just car insurance on the rise. Medical insurance and household insurance are both rising quickly.
If you’re budgeting, don’t be shocked if there’s a significant price jump the next time you need to renew your insurance!
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