Inflation continues to trend downward, economics professors see positive signs

CAPE GIRARDEAU, Mo. (KBSI) –The Federal Reserve’s goal is to get the core inflation rate down to 2 percent. 

And while the Consumer Price Index for the month of December indicates that the 12-month core inflation rate, which excludes food and energy, is still high at 5.7 percent, Southeast Missouri State professor David Yaskewich said this latest data set is a good sign for inflation.

“The good news would be if we compare the 12-month inflation rate at the end of December to the peak value that we saw in June of 2022, we’ve seen six consecutive months where the Consumer Price Index, while still positive meaning prices have increased, the pace at which prices have increased has fallen,” he said.

This gradual slow in the pace of price increases is preferred over a sharp downturn.

“If the economy tanks, if the economy goes into a deep recession, we’ll probably see inflation come down very quickly, and maybe even inflation goes below that 2 percent, but that wouldn’t be a good reason for inflation to fall,” Southern Illinois University professor Kevin Sylwester said. “We’d have more severe problems in other ways.” 

But of course, the Consumer Price Index is just one data set that hints at the state of the economy. The fourth quarter Gross Domestic Product data will be released in two weeks.

“That will give us another indication of how strong the last three months of 2022 were, and that will probably cause us to reevaluate, either positively or negatively, where we are at,” Sylwester said.

We are still a long way from that 2 percent goal, but Yaskewich said we could be close to that number a year from now. 

“If we continued at this pace, of seeing price increases, the annual rate of inflation would be, over 12 months, 3 percent,” he said. “That’s a reason to be optimistic heading into the new year.” 

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