{"id":3336,"date":"2023-10-28T12:13:34","date_gmt":"2023-10-28T12:13:34","guid":{"rendered":"https:\/\/cccfornews.com\/index.php\/2023\/10\/28\/when-will-inflation-be-under-control-a-question-for-chuck\/"},"modified":"2023-10-28T12:13:34","modified_gmt":"2023-10-28T12:13:34","slug":"when-will-inflation-be-under-control-a-question-for-chuck","status":"publish","type":"post","link":"https:\/\/cccfornews.com\/index.php\/2023\/10\/28\/when-will-inflation-be-under-control-a-question-for-chuck\/","title":{"rendered":"When Will Inflation Be Under Control? A Question for Chuck"},"content":{"rendered":"


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By Chuck Bentley<\/span><\/a><\/span>, CP Guest Contributor
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\"Ask<\/a><\/p>\n

Dear Chuck,<\/em><\/p>\n

Inflation is hitting our family hard. We keep hearing it is coming down, but it does not seem that way when I go to the grocery store! When do you think we might see it return to normal? <\/em><\/p>\n

Irritated Over Inflation <\/em><\/p>\n

<\/source><\/picture>
Getty Images\/Malte Mueller<\/span><\/figcaption><\/figure>\n

Dear Irritated Over Inflation,<\/p>\n

You\u2019re not the only one. Before the Israel-Gaza war, the April Pew Research Center<\/a> report showed that a large majority of Americans are dissatisfied with the economy and the overall condition of our nation. In addition, confidence in the future has fallen from a year ago. You are right to be concerned about inflation. Some call it the \u201cinvisible tax\u201d or the \u201csilent thief.\u201d No doubt, it robs families of the purchasing power of their income.<\/p>\n

The silent thief <\/strong><\/p>\n

The Federal Reserve Bank of Cleveland<\/a> reported in a paper titled \u201cThe Long-Run Costs of Higher Inflation\u201d by Jean-Paul L\u2019Huillier and Martin DeLuca, \u201cInflation imposes significant costs on society.\u201d These costs appear in skewed markets and loss of purchasing power. Higher prices force consumers to invest less in order to have more cash on hand. In addition, inflation\u2019s effect on taxes alters investing practices. When wages don\u2019t rise along with prices, fewer goods and services are purchased, which negatively impacts business. Consumers negotiate wages more frequently and devote time and energy to coping with rapidly rising prices, and banks often decrease lending. (More here<\/a>.)<\/p>\n

How long will it last?<\/strong><\/p>\n

Bankrate\u2019s Third Quarter Economic Indicator Poll<\/a> reports that many experts don\u2019t expect inflation to settle in at the Federal Reserve\u2019s 2% goal until some point near the end of 2025. Twenty-nine percent expect inflation will cool by the end of 2024, and 29% say 2026 or later. No economists expect it to reach the Fed\u2019s target by the end of this year. Yelena Maleyev, senior economist at KPMG, says, \u201cThe concern is rising food and energy prices which could have inflationary effects on other areas of the economy.\u201d<\/p>\n

The International Monetary Fu<\/a>nd<\/a> warns of stubborn inflation and weaker global growth in 2024. It increased the pace of consumer price increases across the world to 5.8%, up from 5.2% just three months ago.<\/p>\n

Consumer sentiment is turning negative <\/strong><\/p>\n

I\u2019ve summarized <\/a>The University of Michigan\u2019s Consumer Sentiment Index<\/a> report here:<\/p>\n

\u201cNearly all demographic groups posted setbacks in sentiment, reflecting the continued weight of high prices,\u201d reported Joanne Hsu, director of the university\u2019s Surveys of Consumers. The index fell 7% from September to October, influenced by the war between Israel and Hamas, a spike in bond yields, and political dysfunction. Bill Adams, chief economist at Comerica Bank, wrote, \u2018The impasse over the next House Speaker could be adding to fears of a government shutdown in November; the UAW strike; the restart of student loan payments; and the recent uptick in long-term interest rates could be affecting sentiment, too.\u2019<\/p>\n

The Consumer Price Index rose 3.7% in September from over a year ago. Higher oil prices pushed up gasoline prices, although there is easing in parts of the country. The cost of rent remains elevated. Gregory Daco, chief economist at EY-Parthenon, told CNN, \u2018The tremendous degree of uncertainty around the Israel-Hamas war means it\u2019s very difficult to predict the potential economic fallout.\u2019\u201d<\/p>\n

Personal savings rates are increasing in Europe<\/strong><\/p>\n

The Federal Statistical Office<\/a> found that the savings rate in Italy registered at 2.1%, the United States at 3.7%, Japan at 5.4%, Austria at 8.8%, and Germany at 11.1%. Only the Netherlands at 12.7% and Switzerland at 18.4% surpassed Germany. It is a paradox because German consumer sentiment was -26.7% in October and is expected to fall in November. This has pushed saving to its highest level in over a decade. Unlike many Americans, Germans have a cautious approach to money; they emphasize financial stability and long-term planning. COVID-19 and the uncertainty it caused in the economy pushed them to save more instead of spending. The population\u2019s high level of financial literacy makes saving for emergencies, retirement, and major purchases a priority. This results in long-term economic growth but negatively impacts businesses and overall economic activity with decreased spending on goods and services.<\/p>\n

How people are coping in America<\/strong><\/p>\n