New York (CNN Business)A dollar is no longer worth what it once was.
At the grocery store, it's about 11 cents cheaper than it was just a year ago. That $1 saves 15 cents on utility bills and 6 cents off rent and housing. It makes for a pretty decent chunk of change.
So when will the price increases end? The answer is probably never. But that's not a bad thing, as long as the rate of climb isn't too high.
Why inflation is good
Inflation will never end. And in fact we don't want it to end completely.
The Federal Reserve, the US central bank tasked with keeping inflation down through a series of rate hikes, is aiming for a target of around 2%. That means prices will still go up, but not by much.
When people say inflation is easing, that doesn't mean food is getting cheaper. Entering a period of deflation is extremely rare, and governments want to avoid it if possible. This is usually an indication that the economy is cooling rapidly.
Yes, inflation will go on for a very long time, but I wouldn't worry too much about it. From early 1991 to the end of 2019, year-on-year inflation averaged around 2.3% per month. These are the ideal increases, the kind that can keep up with the rising cost of living, the "in my day soda costs a nickel" kind of increase that will only become apparent over a long period of time.
But for the most part, commodity prices remain high and Consumers won't feel relief until wages catch up with new prices.Nick Rusanov, a professor at Wharton Finance, said there has been no deflation in core goods, excluding food and energy, in the past 40 years. Prices for durable goods and services such as automobiles, electronics, and education rarely fall.
Reasons for optimism
Inflation at its current pace will not last forever. Most economists expect interest rates to fall to a target rate of 2% by 2024. Buying Bread from a Wheelbarrow We Learned in History ClassThe Inflation CrisisNo one cares about hyperinflation, at least in the United States.
That's not to say that high inflation won't last for a while.
Historically, inflation has been rising for a long time in the United States, but monetary policy has changed since then. During that same decade, the central bank had multiple purposes. High production, employment and price stability. Today, the Fed tends to prioritize price stability over other obligations. That means Fed Chairman Jerome Powell is on a mission to raise interest rates until inflation falls, even if the economy falls with it.
Global Crisis
US Likely Safe from Hyperinflation: Sure, Prices Are Rising, But Unprecedented Instead, it eased last month.