Why Everything Costs More (and Sometimes Less)
A plain-English guide to inflation, deflation, and disinflation—plus why your eggs can get cheaper even when your rent won’t budge.
By TheMurrow Editorial
January 21, 2026
Key Points
- 1Recognize what’s really happening: disinflation means prices rise more slowly—cooling inflation doesn’t rewind costs to old levels.
- 2Focus on what drives pain: December 2025 saw shelter +0.4% and food +0.7% m/m, even with eggs down 8.2%.
- 3Audit your personal inflation: track rent, groceries, utilities, and transit for three months—your budget can diverge sharply from CPI-U averages.
A carton of eggs got cheaper last month. Your rent probably didn’t.
That contrast—small, visible price drops alongside the stubborn weight of housing and groceries—is where most inflation conversations go wrong. People aren’t imagining relief when they spot a markdown. They also aren’t exaggerating when they say the cost of living feels unyielding.
The latest U.S. inflation report captures that tension in numbers that sound calm and feel complicated. In December 2025, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3% month over month and 2.7% year over year, according to the Bureau of Labor Statistics (BLS). Core CPI—excluding food and energy—rose 0.2% on the month and 2.6% over the year. Meanwhile, eggs fell 8.2% in December, even as the overall food index climbed.
When headlines say inflation is ‘cooling,’ they’re usually talking about the speed of price increases—not a return to yesterday’s price tags.
— — TheMurrow Editorial
If you’re trying to make sense of how all of that can be true at once, you’re asking the right question. Inflation is a national statistic. Living costs are personal.
Inflation, deflation, and the word that causes most of the confusion
Inflation is not “prices being high.” Inflation is a broad, sustained rise in average prices across the economy—meaning the same dollar buys less over time. Prices can feel high even when inflation is modest; that happens after a period of rapid increases, when the new higher level becomes the baseline.
Deflation is the opposite: a broad, sustained decline in average prices. The same dollar buys more over time. Deflation is rarer than inflation, and it can come with its own risks, but the key point for most households is simpler: deflation means many prices are falling, not just a few.
The term that trips people up is disinflation. Disinflation means inflation is still happening, but the pace is slowing. If prices rose 4% last year and 2.7% this year, inflation “came down,” yet prices still rose.
Deflation is the opposite: a broad, sustained decline in average prices. The same dollar buys more over time. Deflation is rarer than inflation, and it can come with its own risks, but the key point for most households is simpler: deflation means many prices are falling, not just a few.
The term that trips people up is disinflation. Disinflation means inflation is still happening, but the pace is slowing. If prices rose 4% last year and 2.7% this year, inflation “came down,” yet prices still rose.
Why the distinction matters for your wallet
The difference between “inflation is down” and “prices are down” is not academic. It’s the difference between:
- A grocery bill that rises more slowly than last year, and
- A grocery bill that actually returns to old levels
Most households are reacting to the level of prices—the monthly total—while many headlines describe the rate of change.
- A grocery bill that rises more slowly than last year, and
- A grocery bill that actually returns to old levels
Most households are reacting to the level of prices—the monthly total—while many headlines describe the rate of change.
Micro price drops can coexist with macro inflation
Even during inflation, some items fall in price. Inflation is measured as a basket across categories. Phones might get cheaper while rent climbs; eggs might fall in one month while overall food rises. The basket moves based on what households buy and how prices shift across essentials and non-essentials.
Where the “inflation number” comes from—and what it said in December 2025
In the U.S., the inflation number you see most often comes from the Consumer Price Index (CPI), produced by the BLS. CPI-U tracks prices paid by urban consumers for a broad set of goods and services—housing, food, transportation, medical care, recreation, and more.
The latest snapshot (December 2025, released January 13, 2026) shows inflation at a pace that looks closer to “normal” than the spikes Americans endured earlier in the decade, but the composition matters.
Key BLS figures for December 2025:
- CPI-U: +0.3% month over month (seasonally adjusted)
- CPI-U: +2.7% year over year
- Core CPI: +0.2% month over month
- Core CPI: +2.6% year over year
The latest snapshot (December 2025, released January 13, 2026) shows inflation at a pace that looks closer to “normal” than the spikes Americans endured earlier in the decade, but the composition matters.
Key BLS figures for December 2025:
- CPI-U: +0.3% month over month (seasonally adjusted)
- CPI-U: +2.7% year over year
- Core CPI: +0.2% month over month
- Core CPI: +2.6% year over year
+0.3% m/m
CPI-U rose 0.3% month over month in December 2025 (seasonally adjusted), per the BLS.
+2.7% y/y
CPI-U was up 2.7% year over year in December 2025, capturing the broad pace of price increases.
+2.6% y/y
Core CPI (excluding food and energy) was up 2.6% year over year, a common gauge of underlying inflation trends.
The categories that moved the needle
BLS noted that shelter rose 0.4% in December and was the largest factor in the monthly CPI increase. Food rose faster than the overall index: food was up 0.7% month over month, with food at home and away from home both rising 0.7%. Energy was up 0.3%.
Those details aren’t trivia. They map onto how inflation feels. A household can postpone buying a new television. It can’t postpone rent.
Those details aren’t trivia. They map onto how inflation feels. A household can postpone buying a new television. It can’t postpone rent.
The CPI headline is an average. The stress comes from a few categories you can’t opt out of—rent, groceries, gas, utilities.
— — TheMurrow Editorial
A plain-English read of the report
A 2.7% annual inflation rate suggests a general rise in prices, but not the runaway kind. Yet a month where shelter and food both rise meaningfully is a month many people experience as “everything is getting more expensive,” even if some items in the basket are flat or falling.
Why your eggs got cheaper while your grocery bill rose
The BLS data offered a perfect illustration of inflation’s paradoxes: eggs fell 8.2% in December 2025, while food overall rose 0.7%. Consumers notice egg prices because they’re frequent, visible, and emotionally charged—small staples become symbols.
So how can eggs drop sharply in a single month without contradicting a broader food increase? Because “food” is not one price. It’s dozens of categories moving for different reasons.
So how can eggs drop sharply in a single month without contradicting a broader food increase? Because “food” is not one price. It’s dozens of categories moving for different reasons.
−8.2%
Egg prices fell 8.2% in December 2025, even as the overall food index increased.
The mechanics behind price drops during inflation
Several forces can push individual prices down even when overall inflation is positive:
- Supply shocks reversing: After a disruption, inventories and logistics normalize, bringing certain goods down.
- Seasonality and promotions: Holiday discounting, timing of harvests, and retailer promotions can move prices month to month.
- Commodity cycles: Weather, geopolitics, and inventory swings can push input costs up or down.
- Technology and productivity gains: Some goods—especially electronics—tend to get cheaper per unit of performance over time.
Eggs are a vivid example because they can swing with supply conditions and seasonal demand. The key point is broader: monthly movements in a single item can be dramatic without changing the overall inflation story.
- Supply shocks reversing: After a disruption, inventories and logistics normalize, bringing certain goods down.
- Seasonality and promotions: Holiday discounting, timing of harvests, and retailer promotions can move prices month to month.
- Commodity cycles: Weather, geopolitics, and inventory swings can push input costs up or down.
- Technology and productivity gains: Some goods—especially electronics—tend to get cheaper per unit of performance over time.
Eggs are a vivid example because they can swing with supply conditions and seasonal demand. The key point is broader: monthly movements in a single item can be dramatic without changing the overall inflation story.
What to take away at the checkout counter
A falling price in one aisle doesn’t mean inflation is over. It means inflation is uneven. When essentials like food and shelter are rising, “relief” tends to show up as small victories—one item falling, another stabilizing—rather than a sweeping rollback of costs.
Shelter is the quiet heavyweight in the inflation story
If inflation were a household budget meeting, shelter would do most of the talking. In the December 2025 CPI report, shelter rose 0.4% month over month, and BLS described it as the largest factor in the overall increase.
That matters because shelter isn’t just another line item. For many households, it’s the line item.
That matters because shelter isn’t just another line item. For many households, it’s the line item.
Why shelter inflation hits so hard
Shelter costs have three features that make them uniquely painful:
- They’re large: Housing often dominates monthly spending.
- They’re sticky: Rents and housing-related costs tend not to fall quickly.
- They’re hard to substitute: People can change brands of cereal; relocating is expensive.
Even when headline inflation cools, shelter can keep household budgets tight. A small percentage change in rent has an outsized impact compared with the same percentage change in discretionary goods.
- They’re large: Housing often dominates monthly spending.
- They’re sticky: Rents and housing-related costs tend not to fall quickly.
- They’re hard to substitute: People can change brands of cereal; relocating is expensive.
Even when headline inflation cools, shelter can keep household budgets tight. A small percentage change in rent has an outsized impact compared with the same percentage change in discretionary goods.
Multiple perspectives: “Housing is easing” vs “Housing is still unaffordable”
Some analysts will argue that shelter inflation can lag other parts of the economy and may cool with time. Others will point out that affordability is not just a rate-of-change problem—it’s a level-of-prices problem. Both can be true: the pace can slow while the monthly bill remains punishing.
For readers, the practical point is simple. If shelter remains a major driver of CPI, the path from “inflation is down” to “life is cheaper” will feel slow.
For readers, the practical point is simple. If shelter remains a major driver of CPI, the path from “inflation is down” to “life is cheaper” will feel slow.
Your inflation rate isn’t the nation’s—here’s why
CPI-U measures an “average” urban consumer experience. Most people are not average. Inflation is a statistic; household budgets are biographies.
Your personal inflation rate depends on what you buy, where you live, and what you can change.
Your personal inflation rate depends on what you buy, where you live, and what you can change.
The biggest reasons experiences diverge
Several factors can make your inflation feel higher—or lower—than the national CPI:
- Housing situation: Renting vs owning; a fixed mortgage vs moving this year
- Transportation: A long commute vs remote work; gasoline sensitivity
- Family size and food consumption: More mouths, more exposure to food inflation
- Medical spending and insurance design: Out-of-pocket costs vary dramatically
- Region: Prices can move differently across the country
A recent regional example underscores the point. Axios reported that grocery prices in the Western U.S. rose 1.1% in December 2025, highlighting how local conditions can intensify pressure even when national inflation looks steadier.
- Housing situation: Renting vs owning; a fixed mortgage vs moving this year
- Transportation: A long commute vs remote work; gasoline sensitivity
- Family size and food consumption: More mouths, more exposure to food inflation
- Medical spending and insurance design: Out-of-pocket costs vary dramatically
- Region: Prices can move differently across the country
A recent regional example underscores the point. Axios reported that grocery prices in the Western U.S. rose 1.1% in December 2025, highlighting how local conditions can intensify pressure even when national inflation looks steadier.
CPI measures the country. Your budget measures your life.
— — TheMurrow Editorial
A practical way to “audit” your own inflation
If you want a clearer picture of what’s happening to you—not the average—track a short list of recurring essentials for three months:
- Rent or mortgage payment
- Groceries (weekly total)
- Gas or transit costs
- Utilities
- Childcare or medical recurring bills (if applicable)
Even a simple spreadsheet can reveal whether your biggest categories are rising faster than the CPI average—and where small changes might matter.
- Rent or mortgage payment
- Groceries (weekly total)
- Gas or transit costs
- Utilities
- Childcare or medical recurring bills (if applicable)
Even a simple spreadsheet can reveal whether your biggest categories are rising faster than the CPI average—and where small changes might matter.
3-month essentials tracker
- ✓Rent or mortgage payment
- ✓Groceries (weekly total)
- ✓Gas or transit costs
- ✓Utilities
- ✓Childcare or medical recurring bills (if applicable)
“Inflation is cooling”—so why doesn’t it feel better?
December 2025’s CPI numbers—2.7% headline and 2.6% core year over year—sit in a range that sounds manageable. Yet many households still feel cornered. The mismatch is not irrational.
First, disinflation doesn’t erase prior increases. If prices rose sharply in earlier years, a return to moderate inflation means prices keep climbing, just more slowly. The psychological reference point remains the older, cheaper baseline.
Second, inflation’s pain concentrates in essentials. December’s report showed food up 0.7% and shelter up 0.4% in a single month—categories that dominate real budgets. A modest overall number can still hide a rough month in the places that matter most.
First, disinflation doesn’t erase prior increases. If prices rose sharply in earlier years, a return to moderate inflation means prices keep climbing, just more slowly. The psychological reference point remains the older, cheaper baseline.
Second, inflation’s pain concentrates in essentials. December’s report showed food up 0.7% and shelter up 0.4% in a single month—categories that dominate real budgets. A modest overall number can still hide a rough month in the places that matter most.
The media problem: language that overpromises
Headlines often compress nuance into a few words. “Inflation falls” can read like “prices fall.” The BLS data are clear: inflation measures changes over time, not a reset button.
BLS’s CPI release provides the raw material; interpretation is where confusion creeps in. Readers aren’t wrong to expect that “cooling inflation” should bring relief. The reality is that relief is often incremental and uneven, especially when shelter keeps pushing upward.
BLS’s CPI release provides the raw material; interpretation is where confusion creeps in. Readers aren’t wrong to expect that “cooling inflation” should bring relief. The reality is that relief is often incremental and uneven, especially when shelter keeps pushing upward.
What “better” actually looks like
For most households, “better” doesn’t mean deflation. It means:
- Paychecks rising faster than essential costs (especially housing and food)
- Price stability month to month
- Fewer surprises in recurring bills
CPI can signal progress, but it can’t guarantee a feeling. That feeling is built in the categories you pay every week.
- Paychecks rising faster than essential costs (especially housing and food)
- Price stability month to month
- Fewer surprises in recurring bills
CPI can signal progress, but it can’t guarantee a feeling. That feeling is built in the categories you pay every week.
What “better” means in real life
For most households, “better” doesn’t mean deflation. It means:
- Paychecks rising faster than essential costs (especially housing and food)
- Price stability month to month
- Fewer surprises in recurring bills
CPI can signal progress, but it can’t guarantee a feeling. That feeling is built in the categories you pay every week.
- Paychecks rising faster than essential costs (especially housing and food)
- Price stability month to month
- Fewer surprises in recurring bills
CPI can signal progress, but it can’t guarantee a feeling. That feeling is built in the categories you pay every week.
Practical takeaways: how to read inflation data without getting misled
Inflation coverage often turns into a Rorschach test—proof that everything is fine, or proof that everything is broken. Readers deserve a more useful approach: one that treats CPI as a tool, not a verdict.
Three rules for interpreting the next CPI report
1. Separate the rate from the level.
A lower inflation rate means slower increases, not cheaper prices.
2. Watch shelter and food first.
December 2025 showed shelter as the largest monthly driver (+0.4%) and food rising sharply (+0.7%). Those are the categories most households can’t avoid.
3. Use core inflation carefully.
Core CPI (+2.6% y/y) strips out food and energy because they’re volatile. That can help identify underlying trends, but households still have to buy groceries and pay the utility bill.
A lower inflation rate means slower increases, not cheaper prices.
2. Watch shelter and food first.
December 2025 showed shelter as the largest monthly driver (+0.4%) and food rising sharply (+0.7%). Those are the categories most households can’t avoid.
3. Use core inflation carefully.
Core CPI (+2.6% y/y) strips out food and energy because they’re volatile. That can help identify underlying trends, but households still have to buy groceries and pay the utility bill.
3 rules for reading CPI without getting misled
- 1.Separate the rate from the level: a lower inflation rate means slower increases, not cheaper prices.
- 2.Watch shelter and food first: in December 2025, shelter was the biggest driver (+0.4%) and food rose (+0.7%).
- 3.Use core inflation carefully: core (+2.6% y/y) removes food and energy volatility, but households still pay those bills.
A grounded example you can use
Suppose your grocery bill rose even though egg prices fell. That’s not a contradiction—it’s a reminder that one highly visible item can drop while the broader basket rises. December 2025’s CPI showed exactly that: eggs down 8.2%, food overall up 0.7%.
A fair-minded note on policy and blame
People want a villain. Inflation is usually a mix of forces—supply conditions, demand patterns, global commodity swings, and housing dynamics. Claims that any single policy or actor “caused” or “solved” inflation should be treated cautiously unless supported by evidence. The CPI report tells you what changed; it doesn’t assign motive.
Key Insight
The CPI report tells you what changed; it doesn’t assign motive. Be wary of single-cause claims unless they’re backed by evidence.
The bottom line: inflation is moderating, but essentials still decide the mood
The December 2025 CPI report offers a picture that is neither triumph nor disaster. Inflation is running around the mid‑2% range year over year, and core inflation is similar, suggesting a period of relative normalization compared with the most turbulent months earlier in the decade.
Yet the details are where daily life happens. Shelter rose 0.4% in a single month and was the biggest contributor to the increase. Food rose 0.7%, even with a headline-grabbing drop in eggs. Those are not abstract categories; they’re the bills that arrive whether the economy is booming or sputtering.
If you want one lens that clarifies almost every inflation argument, use this: CPI is an average of many prices. Households live inside a few.
When those few categories climb, people will keep saying inflation is a problem—even when the national rate looks calmer on paper. They won’t be wrong. They’ll be describing the economy they actually inhabit.
Yet the details are where daily life happens. Shelter rose 0.4% in a single month and was the biggest contributor to the increase. Food rose 0.7%, even with a headline-grabbing drop in eggs. Those are not abstract categories; they’re the bills that arrive whether the economy is booming or sputtering.
If you want one lens that clarifies almost every inflation argument, use this: CPI is an average of many prices. Households live inside a few.
When those few categories climb, people will keep saying inflation is a problem—even when the national rate looks calmer on paper. They won’t be wrong. They’ll be describing the economy they actually inhabit.
CPI is an average of many prices. Households live inside a few.
— — TheMurrow Editorial
T
About the Author
TheMurrow Editorial is a writer for TheMurrow covering explainers.
Frequently Asked Questions
What’s the difference between inflation and disinflation?
Inflation means prices are rising broadly across the economy. Disinflation means prices are still rising, but more slowly than before. For example, if inflation falls from 4% to 2.7%, prices still go up—just at a slower pace. That’s why “inflation is down” doesn’t mean prices are back to what they were.
Does “inflation is down” mean prices will fall?
Not necessarily. A lower inflation rate usually means slower increases, not declines. Prices typically fall broadly only during deflation, which is a sustained drop in average prices. Even with inflation near 2.7% year over year (December 2025 CPI-U), most prices would still be expected to rise over time.
Why does CPI exclude food and energy in “core” inflation?
Core CPI removes food and energy because those prices can swing sharply month to month due to weather, geopolitical events, and commodity cycles. In December 2025, core CPI was up 2.6% year over year. Core measures can help show underlying trends, but households still feel food and energy costs directly.
If eggs fell 8.2%, why did my grocery bill still rise?
Because grocery bills reflect a basket of items, not one. In December 2025, the BLS reported eggs down 8.2%, yet food overall up 0.7%. Price increases in other food categories can outweigh savings from one item—especially if the rest of your cart includes items that rose that month.
Why is housing such a big deal in inflation reports?
Housing is a large share of household spending and tends to adjust slowly. In the December 2025 CPI report, shelter rose 0.4% month over month and was the largest factor in the monthly increase. When housing rises, many people feel inflation strongly even if other categories are stable or falling.
Can inflation be low nationally but high where I live?
Yes. CPI-U is a national average, and regional costs can move differently. Axios highlighted that grocery prices in the Western U.S. rose 1.1% in December 2025, illustrating how local conditions can diverge from national trends. Your housing market, transportation needs, and local competition all shape your personal inflation rate.
