In the months since COVID-19 has been waning, inflation has been a major concern for all of us as consumers. It’s been a concern for economists and policymakers as well. Finally, however, reports are showing that inflation has been cooling in recent months. In fact, according to recent reporting from Forbes, April of this year marked the 10th straight month of decline in inflation, a hopeful sign for the economy and for consumers.
The decrease in inflation is good news for President Biden, who has made the economy a key priority of his administration. His policies have helped put the country on a path toward economic recovery, and this latest news shows that his efforts are paying off. With less inflation, Americans can have more faith in the economy and feel more secure in their futures. That doesn’t mean our problems are completely over, of course — only that we are seeing progress.
According to Investopedia, the consumer price index “measures the monthly change in prices paid by U.S. consumers.” The Bureau of Labor Statistics calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending. According to a May 10 report by The New York Times, “the Consumer Price Index climbed 4.9 percent in April from a year earlier.” These numbers are a relief for many, as they suggest that inflation might no longer be a major obstacle to economic growth. “Inflation has come down notably from a peak just above 9 percent last summer,” notes the Times, “though it has remained far higher than the 2 percent annual gains that were normal before the pandemic.”
The Bureau of Labor and Statistics showed that grocery prices have dropped for the second consecutive month, gasoline prices moved back up by just 3 percent in April, and used cars climbed 4.4 percent. (USA Today noted on May 10 that the latter happened after nine months of decline.) Rental costs rose at a slower pace according to the BLS report. The overall data shows signs that inflation is continuing to cool down. For instance, airline fares dropped by 2.6 percent in April, while hotel prices plunged by 3 percent after four straight monthly increases. With summer upon us and many choosing to travel, even these small decreases will be welcome.
Another factor to the cooling of inflation is the supply chain disruptions that we’ve seen since the pandemic. As that USA Today article indicates, the pandemic has disrupted global supply chains, leading to shortages and higher prices for goods. However, as these disruptions begin to ease, prices are likely to stabilize and further reduce inflation.
What this indicates is that President Biden’s plan is working. According to a Feb. 6 release from the White House: “President Biden set the goal of transitioning our economy to lower inflation, while maintaining a resilient job market for American workers. Now, annual inflation has fallen for six [now 10] months straight, driven in large part by a roughly $1.50 decline in gas prices compared to last summer. Over the second half of 2022, three-month core inflation fell from nearly 8% at an annualized rate to 3% at an annualized rate — at the same time that the unemployment remained at or near 50-year lows.”
In writing about President Biden’s economic progress, the Office of Political Strategy & Outreach reported “that nearly 11 million jobs have been created — the two strongest years of job growth in history.” It showed “750,000 manufacturing jobs have been created — a faster recovery than any other business cycle since 1953,” and the “lowest unemployment rate in 50 years.” Further, it revealed that “real wages are higher” and that “inflation fell” — and it continues to fall since that report was generated.
All of this news is no doubt a welcome relief to many Americans who have been struggling with rising prices. While the cooling of inflation is a positive sign, it is still important to monitor the data closely. Inflation is down, but it remains above pre-pandemic levels. However, if the current cooling trend continues, we can expect to see further decreases in inflation rates in the coming months, even while recognizing there’s more to do.
As noted in the White House release: “While there is more work to do to bring inflation down and lower costs for families — and there may be setbacks along the way — the past six [now 10] months have marked significant progress toward the President’s goal of bringing down inflation without giving up the economic progress we’ve made.”
Bill Freeman
Bill Freeman is the owner of FW Publishing, the publishing company that produces the Nashville Scene, Nfocus, the Nashville Post, and The News.
