Everything from milk prices to plane tickets skyrocketed this year and consumers’ pockets were definitely feeling the effects. The good news is that inflation finally showed signs of slowing down in October.
Last month, the consumer price index, which helps measure inflation, increased by 7.7% in comparison to October the year before. This is the smallest 12-month increase since January.
While it’s promising that the annual rate is down from June’s 9.1% peak, it’s still far above the Federal Reserve’s goal of keeping inflation around 2% annually.
Unfortunately, it also doesn’t have much direct impact on the prices in the near term. The lag between cooling and prices on goods coming down can last months to several years, so consumers will still see high prices for now. Shelter, food, and energy were still the biggest contributors to inflation in October and those costs don’t seem to be going down anytime soon.
Silver lining up ahead?
The good news, however, is that there are positive long-term effects. Inflation cooling is a promising sign that if a recession happens next year, it won’t be quite as bad as experts initially predicted. A mild recession would mean fewer jobs lost and avoiding an all-out economic downturn, which I think we can all agree, is a good thing.