Take an item that cost $100 in December 2021: Using the average inflation rate for all items and services, the same item would cost $106.47 in December 2022, at which point prices had risen 6.5% in the prior year. By December 2023, the inflation rate had fallen to 3.4%, meaning prices were still rising, but at a slower pace. That month, the item would cost $110.03. In December 2024, it would cost $113.03.
That’s comparatively modest growth over the latter two years, but that growth is happening on top of all previous growth.
Here’s how that increase would look. The blue line, for comparison, represents how that item’s price would have changed if inflation had held steady at its 21st-century average rate, while the pink line tracks the actual price changes. Although the inflation rate has come down, the impact of the period of elevated inflation is still evident. The price hasn’t returned to where it would have been with average growth.