Inside the Consumer Price Index: August 2025

Core Insights - Inflation significantly impacts household expenses, with the Consumer Price Index (CPI) being a crucial economic indicator [1] - The Bureau of Labor Statistics (BLS) categorizes expenditures into eight categories, with food, shelter, and clothing comprising over 60% of the CPI [2] CPI Component Growth - Medical Care and Housing have seen over 100% growth since 2000, while Food and Beverage also increased significantly due to pandemic-related price spikes [4] - Apparel has only grown about 2% since 2000, showing seasonal volatility, while Transportation exhibits high volatility driven by motor fuel prices [5] Energy Costs - Energy is not treated as a standalone category in the CPI but is distributed across Housing and Transportation expenses, with a relative importance of 6.216 out of 100 as of December 2024 [6][7] College Tuition - College Tuition and Fees have increased nearly 200% since 2000, representing 1.324% of total expenditures, which can severely impact household budgets [8] - The BLS's calculation of tuition often does not reflect actual costs after financial aid, potentially exaggerating the inflation impact [9][10] Core Inflation - Core Inflation, which excludes food and energy, is closely monitored by economists, with an annualized rate of change of 2.92% for headline CPI and 3.11% for core CPI as of August 2025 [11][12] Household Impact - The impact of inflation varies significantly among households, with lower-income families and those with high transportation or medical costs being more vulnerable [15][16]