Producer Price Index falls half a percentage point: what this means for the economy & for you

Published: Jan. 19, 2023 at 9:38 PM CST
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BIRMINGHAM, Ala. (WBRC) - Some good news about the economy and your money! The prices manufacturers pay to make goods before they sell them to you are going down—and experts said that could be a sign inflation is cooling.

The Chair of Accounting and Finance at UAB says she’s cautiously optimistic about how this news will impact inflation.

She recommends that we all keep doing what we’re doing to continue having this good economic news.

The Producer Price Index—the measure of inflation at the wholesale level—dropped half a percentage point; better than analysts predicted.

“If prices are falling, inflation is falling and that’s a good thing…and it’s falling more than we anticipated, so that’s a really good thing.”

Dr. Stephanie Yates said we can thank a sharp decline in energy and food prices for bringing down the inflation reading, though it is still high.

But prices for goods and services fell in December— another sign inflation is starting to cool.

“It’s so funny to see all the memes of chickens carrying designer bags because their value is so high these days, but we’re going to see that dropping off. So, those chickens might be getting back to reality very soon,” Dr. Yates said.

Dr. Yates said the trends are moving in the right direction and you can expect to see some relief in high prices almost immediately.

But don’t expect those changes to be drastic.

“People want to see the price of their eggs cut in half tomorrow. That’s not what we’re talking about. What we’re saying is that we should continue to see this steady decline. So, we’re seeing it now. We’ll see it immediately, but it’s going to be small steps,” Dr. Yates explained.

Dr. Yates said it’s possible we could see some prices go back to pre-pandemic levels, but she said it could take several months for that to happen.

She recommended paying more attention to prices at stores so you’re aware of the changes, but don’t make any significant changes in your buying behavior—at least for now.

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