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Fed Chair Jerome Powell has spilled the beans on a hidden reason why inflation remains stubbornly high—and it’s sure to resonate with many Americans.

Last month, Powell told the Senate Banking Committee that record insurance premiums have become one of the most significant contributors to lasting inflation.

“Insurance of various different kinds—housing insurance, but also automobile insurance, and things like that—that’s been a significant source of inflation over the last few years,” Powell explained. “And it’s to do with a million different factors.”

In fact, in February, the consumer price index rose 3.2% year-over-year. Over the same period, motor vehicle insurance was up a whopping 20.6%.

“The behavior of the MVI [motor vehicle insurance] component of the CPI has truly been remarkable, and I don’t see any evidence of near-term relief,” Tom Simons, U.S. economist at Jefferies, told Reuters in an email.

Unfortunately, auto insurance rates are only the tip of the iceberg.

According to Policygenius, homeowners are spending $175 billion, or 21% more, on insurance in 2023 than a year ago. Compared to pre-pandemic levels, the cost of insuring a home in the U.S. has increased by a staggering 50%.

Insurance experts blame extreme weather events for the increase in homeowner insurance. "In the longer term, companies are withdrawing from writing insurance in some coastal areas. It’s a significant issue,” he said.