Where Inflation Hit the Middle Class Hardest in 2025

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Inflation reached a 40-year high of 9.1% in June 2022, according to the U.S. Bureau of Labor Statistics (BLS). While prices have stabilized since then, the cost of living hasn’t gotten any lower.

Some areas have been hit harder than others, especially for middle-class households. This includes food, housing, healthcare and child care costs.

Healthcare

Healthcare costs tend to increase faster than overall inflation. In 2023, out-of-pocket costs were around $1,514 per person, according to the Kaiser Family Foundation (KFF). In general, healthcare costs have risen between 2% and 3% every year for the past few years.

But costs are expected to rise even more going forward.

Approximately 22 million Americans who receive health insurance through the Affordable Care Act (ACA) Marketplace also receive an enhanced tax credit that subsidizes their monthly premiums. This credit is currently set to expire at the end of 2025. This means many people who currently qualify for subsidized health insurance — including lower- and middle-class households — will see an increase in their premium payments.

The exact subsidy depends on household income. The Pew Research Center defines “middle class” as any household earning between two-thirds and double the U.S. median income which, in 2024, was $83,730. That’s $55,820 to $167,460.

To put this into context, the average enhanced tax credit on the ACA marketplace is $5,525 for someone earning $65,000. In 2026, those with this household income won’t receive a tax credit. This means that money has to come out of pocket.

Unless the enhanced tax credit is renewed, the KFF estimates monthly premiums will more than double on average. General out-of-pocket spending (from hospital visits to prescription medications) is also expected to increase even more in the coming years. Here’s a quick rundown of anticipated out-of-pocket costs per capita from now through 2033, as per the Healthy System Tracker:

• Hospital services — 3.2% average increase per year
• Physician and clinical services — 2.6% average increase per year
• Prescription medications — 3.4% average per year

Food

As per the BLS, food prices rose 3.1% in the 12 months ending in September 2025. Groceries went up by 2.7%, while food away from home rose by 3.7%.

While not every middle-class household is affected equally — after all, incomes vary wildly — rising food prices are still a concern for many. In a September 2025 survey by Axios, nearly half of Americans said groceries are harder to afford now than they were a year ago. Only 19% of respondents reported experiencing no notable difference.

Housing

For some, homeownership is a sign of being middle or upper class. But with housing prices on the rise, this isn’t quite as true as it once was.

The Federal Reserve Bank of Atlanta considers homeownership to be affordable when no more than 30% of household income goes toward housing expenses like taxes, private mortgage insurance (PMI) and property insurance. For someone in the middle class, that means housing should cost no more than $18,606 to $55,820 annually (or $1,550 to $4,652 monthly).

But inflation has pushed prices ever higher. Redfin reports that homes have gone up by 1.2% over the past year (as of October). Along with this, inflation can affect the costs of things like materials, labor, moving services and appraisals.

Note that inflation also indirectly impacts mortgage rates. In periods of higher inflation, the Federal Reserve tends to increase its federal funds rate, which can lead to increased mortgage interest rates. For middle-class households looking to buy a home, this could be good news as mortgage rates have actually fallen in the past 12 months.

Child Care Services

The cost of raising kids has never been low, but inflation plays a role even here. The inflation rate for childcare was approximately 22% from 2020 to 2024, according to Childcare Aware of America. Last year alone, the average cost of childcare was $13,128. That breaks down to $1,094 a month.

The World Population Review further estimates the average yearly cost of childcare (for infants) at about $1,230 a month. While not a one-for-one comparison in all cases, that’s an 11% increase.

Transportation

Last but not least is transportation.

As per Kelley Blue Book, the average cost of a new vehicle is $50,800. This time last year, it was $49,740. That’s a 2.1% increase. The average monthly new car payment at the start of this year was $745. That’s already a hefty amount for many middle-class budgets, but it’s not accounting for other costs like gas, insurance, maintenance and — of course — rising vehicle prices.

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