Financial expert explains the signs of inflation cooling
BIRMINGHAM, Ala. (WBRC) - There are signs inflation is getting better. The U.S. Bureau of Labor reports the Producer Price Index is down. This means the prices manufacturers pay to make the goods you buy are a bit lower.
They say they PPI dropped 0.5% in December; it’s a good sign that inflation might be cooling.
Beth Moody, a senior advisor at The Welch Group, says there are three big factors that play into inflation slowing:
- All excess cash from the COVID-19 stimulus payments have dwindled so people have less cash to spend
- Oil prices are relatively stable
- Interest rates are up
Inflation slowing doesn’t mean prices are dramatically dropping. Moody says it means prices are not increasing as rapidly as before. The up side of that, Moody says you can better plan your finances.
“I don’t think people are going to have as big of a shock when it comes to their budgets this year,” said Moody. “Over the last year, the price increases were really dramatic so you made a plan and then two months later, you had to readjust your budget. So I think where people are really going to see the impact on their bottom line. They’re going to be able to actually make plans this year, hopefully, compared to last year.”
Moody says it seems more reasonable for inflation to continue on a down trend but at this point, it’s too early to tell. She says we just have to wait and see.
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