The headline US inflation number has returned to the Federal Reserve's 2% target, and the White House has celebrated the achievement. But a more granular look at Bureau of Labor Statistics data reveals a tale of two inflations: goods prices that have actually deflated, and services prices β the ones that matter most for working-class Americans β that remain stubbornly elevated.
Car insurance is the most dramatic example. The average US auto insurance premium has increased 47% over the past three years and shows no sign of meaningfully reversing. The drivers are structural: repair costs are up 35% due to the complexity of modern vehicles, catastrophic weather claims have surged 60% due to climate-related events, and litigation costs in states like Florida and California have driven carriers to reduce coverage or exit markets entirely.
Childcare costs have increased 28% in three years and now consume an average of 19% of family income for households with young children β more than housing in most US cities. The shortage of licensed childcare workers, who earn an average of $14/hour despite the sector's critical importance, is structural and unlikely to resolve without significant policy intervention.
Shelter costs β rent and equivalent metrics β remain 6.2% above year-ago levels even as overall inflation hits 2%, reflecting the structural housing supply shortage that has resisted monetary policy remedies.
