Higher prices are hitting most people pretty hard, even if they have received pay raises. On average, weekly paychecks, adjusted for inflation, fell 3.6% in July compared with a year ago.
Explainer: After mixed US inflation signals where are prices going?
US consumers struggling with skyrocketing prices for food, petrol, cars and rent got a tantalizing hint of relief last month, when prices didn’t budge at all from June after 25 straight months of increases. With petrol prices continuing to fall, inflation is probably slowing further this month.
So has the worst bout of inflation in four decades possibly peaked? Economists say it’s too soon to know for sure. Even if it has peaked, it will likely remain high well into next year.
Since inflation ignited early last year it has temporarily slowed, only to re-accelerate in later months. When that happened last fall, Federal Reserve Chair Jerome Powell was forced to jettison his description of higher prices as being merely “transitory” and to acknowledge that high inflation was proving to be chronic.
Even if some prices should keep declining, others — housing costs, for example — are almost sure to remain painfully high. And that means there’s likely still a long way to go before inflation will get anywhere close to the 2% annual pace that the Fed has targeted and that Americans were long accustomed to.