What are the biggest drivers of inflation in the past year?
Updates published monthly
From August 2024 to August 2025, mostly housing. During that time frame, housing price increases accounted for three-fifths of the overall inflation rate. The inflation rate is calculated using the Consumer Price Index (CPI), which tracks the price changes of a consistent basket of goods and services over time. As of August 2025, overall prices increased 2.9% over the previous year. Each item in this basket is given a weight that reflects how much the average urban household spends on it. Items with higher weights, like shelter, tend to have a larger impact on the overall inflation rate than other categories. By examining the price changes across different categories, we can better understand the factors contributing to the current inflation rate.
2.9%
annual inflation rate, all items (Aug 2024 to Aug 2025)
3/5
of the inflation rate was driven by prices changes in housing
The basket of goods and services used to calculate the Consumer Price Index (CPI) includes more than 200 individual items, grouped into eight major categories. These categories are:
- housing
- transportation
- food and beverages
- medical care
- education and communication
- recreation
- other goods and services
- apparel
All eight categories have their own inflation rates that contribute to the overall inflation rate. If prices decrease in a category, its inflation rate is negative and it brings the overall inflation rate down.
In August 2025, the overall inflation rate for all items regardless of category was 2.9%. Of this, 1.8 percentage points came from price increases in housing. Housing accounted for about three-fifths of the annual inflation rate.
In August 2025, housing contributed 1.8 percentage points to the 2.9% overall inflation rate.
Components of year-over-year percent change of CPI-U, all items, not seasonally adjusted
The weight assigned to each category reflects its relative importance in a typical household’s budget, determined based on surveys of more than 20,000 households and individuals. Housing, which includes shelter, utilities, and household operations, holds the largest share of the CPI. Transportation has the second-highest weight, while food and beverages are third. Transportation had a 0.17 percentage point contribution to the annual inflation rate in August 2025. Food and beverages had a 0.45 percentage point contribution.
Housing accounts for the largest portion of the CPI.
Relative importance in the CPI-U, by goods and services, as of August 2025
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Regardless of the importance of categories within the CPI, looking at the inflation rate of each category can provide an understanding of how much prices are increasing or decreasing.
The highest inflation rate among the eight categories was that of housing. Housing prices were 4.0% higher in August 2025 than they were a year before.
At the other extreme during the same period, apparel prices increased 0.2% from a year before.
In August 2025, housing prices were 4.0% higher than they were a year before.
Year-over-year percent change of CPI-U (Aug 2024 to Aug 2025), not seasonally adjusted
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Methodology
USAFacts standardizes data, in areas such as time and demographics, to make it easier to understand and compare.
The analysis was generated with the help of AI and reviewed by USAFacts for accuracy.
