Scott Olson/Getty Images
Inflation has cooled significantly in recent months — but you may still find yourself paying more at the grocery store or the doctor’s office than before the pandemic.
It’s a big reason why people are unhappy about the economy, as this recent Gallup poll revealed, even if by many measures the economy is actually doing quite well.
So what does it actually mean when inflation is easing?
Simply put, falling inflation, or “disinflation,” means prices are rising more slowly than they had been. That’s a good thing. Grocery prices have climbed less than 2% in the last 12 months, compared to a 12% jump the previous year, which gave many people sticker shock at the supermarket.
What many people want to see, however, is “deflation,” when prices actually come down. Falling prices are not generally good for the economy, though.
Here are four things to keep in mind.
Don’t Dis the Disinflation
Inflation has fallen sharply — from a peak of 9.1% last year to just 3.1% in November.
That’s giving the Federal Reserve a lot of comfort, even though policy makers still want inflation to ease more.
On Wednesday, the Fed signaled it may start cutting interest rates next year, triggering a big rally in the stock market. Fed officials are aware, though, that…
Read the full article here