- Although many experts do not think inflation will return to normal right away, it could happen in a year or two.
- Consumer price inflation has mostly been slow this year.
- David Kelly of JPMorgan Asset Management is an expert who sees inflation on track to hover around the Fed’s 2% target by the end of next year.
Inflation has been the biggest problem in the economy for the last few years, but its end may be coming in the near future.
Some experts believe inflation as measured by the consumer price index will remain around 2% until sometime in 2024 – the Fed’s target year-over-year price growth rate.
The consumer price index rose 3.2% year-on-year in October, significantly less than the incredibly high 9.1% year-on-year increase in June 2022. October’s increase is also a lower year-over-year increase than August and September.
Core CPI, which excludes food and energy, rose 4.0% in October from October 2022. This increase is not only less than the 4.1% increase in September, but it is the smallest increase since September 2021.
“Slow consumer demand, declining housing rents, low profit margins, subdued wage growth and restrictive monetary policy represent the ideal disinflationary combo in 2024,” EY chief economist Gregory Daco said in a recent note.
“We expect headline and core CPI inflation to be around 2.2% year-on-year in Q4 2024,” Daco said in its commentary.
David Kelly, chief global strategist at JPMorgan Asset Management, echoed similar views in remarks following the release of the CPI report on Tuesday.
“Overall, this report confirms that CPI inflation is on track to fall near 2% year-on-year by the fourth quarter of 2024 and that consumption deflator inflation is still likely to fall below the Fed’s 2% target. Time The limit,” Kelly said.
“We estimate that headline inflation from April will be in the 2-2.5% range and core CPI will test 2% in the second quarter,” said an article by ING’s James Knightley before the new CPI data was published.
Still, a third-quarter Bankrate Economic Indicators survey of experts and economists conducted in September found that 41% said reaching the target inflation rate would not happen “until some point before the end of 2025,” as Sarah Foster reports. stated in. For Bankrate on the results.
And a summary of the Fed’s economic projections from September showed that the central bank’s key decision makers are projecting 2.5% inflation in their preferred personal consumption expenditure price index measure at the end of 2024, 2.2% for 2025 and 2.0% for 2026. Had predicted.
The year-on-year increase in the PCE price index for July, August and September was the same 3.4%.
An article by Goldman Sachs also said that “the hard part of the inflation battle is over” and that “inflation is on track to fall further in 2024.”
Core PCE growth this September stood at 3.7% year on year. Goldman Sachs estimates the measure is expected to cool in December 2024 and see growth of 2.4% year-on-year.
Federal Reserve Chairman Jerome Powell said at a policy panel earlier this month that the Federal Open Market Committee is committed to “achieving a monetary policy stance that is restrictive enough to bring inflation down to 2% over time.” is; we are not confident that we have achieved such a stance.”
Powell said, “If it is appropriate to tighten the policy further, we will not hesitate to do so.” “However, we will continue to proceed with caution, allowing us to address both the risk of being misled by a few good months of data and the risk of excessive strictness.”
The blow of inflation may have subsided but people are still feeling its impact.
Mark Hamrick, senior economic analyst at Bankrate, told Business Insider based on recent Bankrate survey results of U.S. adults that half of them feel their financial situation is worse than where it was in November 2020.
Hamrick said that while there are some things in the economy that are showing signs of strength, “there are a number of things that continue to weaken consumer and business confidence.”
Hamrick said, “It’s been an ongoing topic where I’m talking to people about data, even non-journalists talking about data, and I think some people Having a hard time understanding where the negative tone is coming from.” “I think this survey, because cost of living is essentially the number one irritant, where people are saying that’s the primary thing that has gotten significantly worse over the last three years, the end result is that inflation is clearly It is caused by.”