Inflation Almost Back on Track, but Americans Are Impacted by Hefty Prices

In 2023, inflation came down from the sky-high rise experienced over a period of 33 months. However, it has left an impact on Americans, especially those who fall in the lower income bracket, reports CNN.

Jason Viana, The Open Door’s executive director said, “The years of inflation, they stacked on top of each other. We were seeing the impact of [rising wages], but inflation wiped all that out.”

During 2022, the U.S. witnessed a rise that had not been experienced in 40 years, and the Federal Reserve was in overdrive trying to bring it back down again.

At the beginning of this year, inflation wasn’t quite as extreme, as the Consumer Price Index had come down to 6.5% after peaking at 9.1% in June 2022. However, the U.S. economic outlook was still uncertain due to ongoing concerns about whether the aggressive Fed campaign would lead to a recession. Thankfully, that did not happen.

At the moment, it looks like the Fed has made a comeback on its mission to bring down inflation without the economy heading into a recession. The labor market remains strong, and that has helped to encourage consumer spending to keep the economy running.

Gus Faucher, senior vice president and chief economist of the PNC Financial Services Group said, “It’s been a difficult few years, but I do think that in 2023, the situation is improving for households as inflation has slowed and as wage growth has remained above the pre-pandemic trend.”

However, he also said that many lower-income Americans are still having a tough time. “The types of prices that went up in 2021 and 2022, they tend to carry more weight for lower-income households, and they obviously had less of a cushion to start with,” Faucher stated.

Abbella DiNoto, a 50-year-old disabled veteran on a fixed income, told CNN, “I’ve been barely getting by, by the skin of my teeth, for the last three years since Covid. With the cost of food, the cost of everything going up, I’m getting to the point where I have zero money left over at the end of the month.”

DiNoto said she has had to use up her credit card and go into debt to cover expenses she could not account for. “This month, I could not pay any of my bills,” she added. “And my debts and my bills are mounting, and now I’ve got late payments hitting me and all these credit card fees, and now my minimum payments have gone up, and I’m hurting bad.”

The most recent inflation figures show that the pace at which prices are rising has slowed down significantly. However, there’s still a long way to go before inflation is where the Fed wants it, according to CNN.

The steep prices experienced prior to this year impacted the cost of almost everything, and they stayed up for a significant time. The duration of this rise has made it trickier to bring consumer costs back to the levels before they spiked.

Fed Chair Jerome Powell warned throughout the year that deflation to the central bank’s 2% target will be a “long and bumpy” road.