But that’s not what the data actually show.
According to the official CPI report from the BLS, the overall CPI rose 2.4% over the past 12 months, after rising 2.7% in the year ending December. That is a deceleration. But it is not a decline in prices. Prices still rose everywhere consumers spend — on food, rent, medical care, and services — and in many cases remained stubbornly high (especially food, which rose nearly 3% YOY). (Bureau of Labor Statistics)
Slowdown ≠ Relief at the Store
A common mistake in popular commentary is conflating “inflation slowed” with “inflation fell.”
But inflation slows when the pace of price increases decelerates — it does not mean that prices actually dropped. For most households, the cost of living is still going up. A 2.4% annual price increase means $100 worth of goods in January 2025 now costs about $102.40 — not less than before. That’s not relief; it’s erosion of purchasing power.
Meanwhile, core inflation — the measure that strips out volatile food and energy — still increased 2.5% over the year. That reflects persistent price pressures in services and essentials most families can’t avoid.
Why This Matters for Investors (Especially “Impact” Investors)
Inflation isn’t just a macroeconomic abstraction; it affects real people — especially low- and moderate-income households — and real investments. When inflation remains elevated:
Consumer budgets are squeezed, meaning less discretionary spending and financial stress.
Real returns on investments shrink, particularly for fixed-income and social impact strategies that rely on stable consumer conditions.
Inequality widens, because essential price increases (housing, healthcare, food) disproportionately hit vulnerable populations.
Impact investors often work at the intersection of capital and real-world outcomes. Understanding the difference between headline narratives and household realities matters deeply when you’re evaluating where capital can do the most good. Misreading inflation as “defeated” can lull investors and policymakers into complacency — even as families still struggle to keep up with cost increases.
The Politics of Framing
It’s no secret that some political actors, including former President Donald Trump, have seized on the slight downward shift in the headline inflation figure as proof that their preferred policies worked. That framing is appealing, but it oversimplifies economic reality.
Decades of research show that inflation statistics are complex, influenced by changing price patterns across hundreds of categories. Highlighting a minor deceleration without context amounts to political cheerleading, not sober economic interpretation.
For Your Portfolio and Purpose
Impact investors should watch how narratives — like “inflation fell!” — influence markets, policy decisions, and consumer confidence. Tempestuous inflation stories can lead to:
premature interest rate cuts that don’t align with underlying cost pressures;
underestimation of cost pressures in sectors like healthcare, education, and housing;
misallocated capital flows chasing complacency rather than addressing structural economic inequities.
Understanding the data beneath the headlines empowers impact investors to align capital with long-term social and economic resilience, not short-term political spin.