By Jon Maxson, CEO of Beacon Capital Management.
Is inflation finally going down? Well, it’s at least decelerating.
Today’s update from the U.S. Bureau of Labor Statistics revealed that consumer prices are up 5% year-over-year in March, or .1% month-over-month from February—which is the lowest increase we’ve since May 2021.1 That’s thanks in part to energy and grocery prices going down slightly.
The consumer-price index—or CPI—tracks the cost of essential expenses like food, housing, energy, and more. The fact that the CPI has only increased 0.1% over the last month is promising. It means that, while inflation is still far from acceptable, it is showing signs of slowing down. Federal policymakers want to see inflation around 2% as an indicator of healthy growth while still be sustainable.
Even though inflation is still at 5%, take a breath. We believe that inflation has peaked for a while, and as the economy slows, the hope is that the Fed will slow interest rate hikes and investors gain confidence in the market. Everyone might even be able to afford eggs again.
If Inflation is Going Down, Why Are Things So Expensive?
If, like most of us, you’re still feeling the pain of inflation in your budget, here are some key areas likely effecting you…
Year over year:2
- Food “away from home” (i.e. eating out at a restaurant) costs 10.2% more this year vs. last year
- Shelter prices have risen 8.2%
- Motor vehicle maintenance and repair costs 12.5% more this year
- Airfare is up 26.5%
Because inflation has been so high for the last year, it’s going to be a while before we feel the effects of it coming back down. These things happen gradually, and it has a long way to go because it was at a record high.
Here’s some good news for retirees, though: Healthcare costs are trending down, even if slightly. The medical care index fell 0.3% in March after going down 0.5% in February. That means services from a hospital and physician’s office cost slightly less.
Protect Your Retirement Whether Inflation Goes Down or Not
If your fixed income remains the same over 20 years of retirement, but current inflation eventually goes down and hits the Fed’s target rate of 2% per year, will you have enough money to last?
Look, no matter what happens with the Federal Reserve, the market, or the economy, there are things you can do right now to help prepare your retirement income for rising inflation. Enter your information below and we’ll send you a free copy of our Inflation Guide today!
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