Energy is the area in which inflation varies the most, largely because of how much oil prices fluctuate. Energy inflation went from 29.3% in July 2008 to negative 28.1% in July 2009 as oil demand dropped during the financial crisis. The opposite happened in 2022, when the Russia-Ukraine war drove up oil prices and the value of oil stocks, pushing energy inflation as high as 41.6%.
New-vehicle inflation has been below overall inflation throughout much of this century. Car prices even went through a deflationary period from October 2006 to May 2009 as the automotive industry dealt with declining sales. The only notable period when car costs spiked was in 2021 and 2022, when supply-chain issues and chip shortages pushed new vehicle inflation as high as 13.2%.
Cars weren't the only items that got more expensive in the early 2020s. Food inflation rose quickly in 2022, peaking at 11.4%, and stayed elevated until late 2023. Higher transportation costs, record highs in grain prices due to the war in Ukraine, and droughts across the United States were all contributing factors that made trips to the grocery store much more expensive.
The price of eggs and inflation
The average price of a dozen eggs in January 2025 was $2.58. That's $2.37 cheaper than the average price in January 2024 and $3.65 cheaper than their peak price in March 2025 at $6.23 a dozen.
The cost of eggs skyrocketed from the middle of 2024 through the first few months of 2025 due to the avian flu spreading through poultry farms. Egg prices rose 97% year over year in February 2025 and more than 30% from the previous year in each month from September through the end of the year.
Why investors should keep an eye on inflation
Inflation has a significant impact on the stock market. When inflation is rising faster than wages, consumer purchasing power goes down. This typically leads to lower spending, which is bad for businesses.
In some cases, the Federal Reserve will raise interest rates to fight surging inflation, as it did in 2022. It then becomes more expensive for companies to borrow money, cutting into profits and potentially slowing expansion.
Stocks tend to perform best when inflation is around the Fed's 2% target. Here's the average annual return of the S&P 500 in different inflation environments.
