Will the CPI go up or down in 2023 in the US according to the experts?
Inflation has been decreasing in the last three months and is set to return to the Federal Reserve target by the end of 2023.
Promising inflation data from November 2022 has experts sensing a return to low inflation by the end of 2023.
These predictions have been made as inflation fell from October by six percentage points to 7.1% in November, the slowest all year. Prices have been affected by price-gouging, pandemic-related supply chain problems, as well as the war in Ukraine.
Despite the positive news, prices are still increasing at abnormal rates compared to the last two decades. While the data shows inflation is beginning to slow, important metrics like grocery prices are still 14 percent higher compared to a year ago, squeezing the pockets of consumers even if other prices are increasing much slower.
What have experts said about inflation?
Janet Yellen, US Treasury Secretary, spoke to news outlets over the weekend for her hopes of a return to normality by the end of 2023.
“I believe by the end of next year you will see much lower inflation if there’s not ... an unanticipated shock,” she told CBS’ ‘60 Minutes’ in an interview.
On the likelihood of recession, the former Federal Reserve chair said, “There’s a risk of a recession. But ... it certainly isn’t, in my view, something that is necessary to bring inflation down.”
It had been expected that the aggressive increasing of interest rates by the Federal Reserve was to plunge the economy into recession, though this has yet to materialise.
Independent analysts also made clear their belief that the Fed inflation target could be met by the year’s end.
Seema Shah, chief global strategist at Principal Asset Management, said inflation “may actually be tamed within the next 12 months”.
Others warned that even if inflation is overcome the damage done over what will then be 18-months will have a lasting effect on prices.
“While inflation is moving to a better place, it is not yet in a good place. The month-over-month changes show inflation pressures are cooling. But compared to a year earlier, prices broadly remain historically high,” said Mark Hamrick, senior economic analyst for Bankrate.com.