📉🤔 Da ‘Inflation Cool Down’ in America: Goin’ Last or Wat?
⬇️ Pidgin | ⬇️ ⬇️ English
Howzit, everybody! 🌺 We stay talking about one big kine story: Da quick fade of inflation in 2023. Was one surprise, yeah? But now da big question: Gonna stay cool in 2024 or wat?
Prices was climbing high in 2021 and 2022, squeezing da pockets of da American families and making President Biden’s approval rating kinda shaky. But late 2023, brah, da inflation wen cool off faster than da economists wen tink! Now everybody stay wondering if da good times going last into 2024. 🧐
Da guys who forecast da economy stay looking hard at wea dis slowdown wen come from. Look like was cause of da prices for stuffs like clothes and used cars wen go down, and da cost for services like travel wen moderate. But, da rent hikes, dey taking time to slow down.
Dis all suggests maybe we get more disinflation (dat’s when da speed of price increases slows down) coming up. But, watch out, still get some risks hanging around. Here’s da lowdown on da big changes:
Disinflation, wat dat?
Wat’s happening in America now is called “disinflation.” Means da pace at which prices going up compared to last year has slowed down big time. Mid-2022, prices was going up 9.1 percent every year. By November, was only 3.1 percent. But no get confused, cuz prices not dropping, dey just not climbing as fast. Tings like rent, car repairs, and groceries still cost more than in 2019. (And wages been going up too, even faster than prices recently). In short, prices still going up, just not like one rocket. 🚀➡️🐢
Da target inflation rate
Da Federal Reserve, da guys in charge of stabilizing prices, dey like see price increases go back to a slow and steady 2 percent every year. Dis da same kine goal as other central banks around da world.
So, wat caused da 2023 disinflation?
Inflation wen catch da economists off guard in 2021 and 2022, going up quick and staying high. But mid-2023, started dropping faster than expected. Da Fed thought inflation gonna end da year at 3.2 percent, but da latest data from November wen show it wen go down to 2.6 percent. Da Consumer Price Index measure also been coming down fast.
Da cool down began with travel prices slowing down, like airfares, because more flights and seats were available, and jet fuel was cheaper. Hotel room rates, which wen jump in 2022, also started increasing more slowly by mid-2023.
Goods prices also started climbing slower or even dropping, especially for tings like furniture, clothes, and used cars. Da amount of disinflation from goods was surprising and broad-based.
Wat could be da next ting to watch?
One big kine disinflation we still waiting for: rental inflation slowing down. Private data tracking new rents wen go up fast early in da pandemic, but then slowed down. Many economists tink dis slowdown gonna show up in da official inflation data eventually, but taking time.
So, da housing inflation still higher than normal, with rent increases and owned housing costs slowing only gradually.
In summary, 2023 wen bring one unexpected relief in inflation, with prices not climbing as fast as before, thanks to a mix of supply improvements and moderating costs in various sectors. However, da housing market still remains a variable. Everybody stay watching and waiting to see if dis “Inflation Cool Down” gonna stick around or if get more surprises coming up in 2024. Stay tuned, cuz dis story still unfolding! 📊👀🌴
NOW IN ENGLISH
📉🤔 Is America’s Inflation Cool Down Here to Stay?
Hello everyone! 🌺 Let’s dive into a significant story: the unexpected easing of inflation in 2023. It was quite the surprise, wasn’t it? But now the big question looms: Will this trend continue into 2024?
Prices had been rapidly increasing in 2021 and 2022, putting a strain on American households and impacting President Biden’s approval ratings. However, by late 2023, inflation began to cool off much faster than economists had predicted, sparking hopes for a stable economic future. 🧐
Economists, in their efforts to predict what’s next, are scrutinizing the recent slowdown’s origins. It appears that a decrease in the prices of goods like clothing and used cars, along with moderating service costs including travel, have contributed to this cooling. However, rent increases are still lingering.
This situation suggests we might see more disinflation (a slowing in the rate of price increases) ahead, but there are still a few risks on the horizon. Here’s a breakdown of the significant changes:
What exactly is disinflation?
What America is experiencing right now is “disinflation.” It means that the rate at which prices are rising compared to last year has noticeably slowed. In the summer of 2022, consumer prices were increasing at a yearly rate of 9.1 percent. As of November, it had dropped to just 3.1 percent. However, this doesn’t mean prices are falling; they’re just not rising as rapidly. Items like rent, car repairs, and groceries are still more expensive than they were in 2019. (It’s worth noting that wages have also been rising, recently outpacing price increases). In short, prices are still going up, just not as quickly as before. 🚀➡️🐢
What inflation rate is the target?
The Federal Reserve, responsible for maintaining price stability, aims to bring price increases back to a slow, steady pace, consistent with a sustainable economy. Like other central banks globally, the Fed targets a 2 percent annual inflation rate.
What caused the disinflation in 2023?
Economists were initially taken aback by the rapid and sustained inflation in 2021 and 2022. However, starting in mid-2023, inflation began to decrease faster than many had anticipated. The Federal Reserve had expected inflation, as measured by the Personal Consumption Expenditures index, to end the year at 3.2 percent. Instead, it fell to a modest 2.6 percent by November. The Consumer Price Index also showed a rapid decline.
The slowdown began with a decrease in travel costs, particularly airfares, as the supply of flights and seats caught up with demand and jet fuel prices dropped. Additionally, the rates for hotel rooms, which had surged in 2022, were rising much more slowly by mid-2023.
Goods prices also contributed to the slowdown. After two years of sharp increases, the prices for products like furniture, apparel, and used cars started to rise more slowly or even decrease. This broad-based deceleration in goods prices was unexpectedly substantial.
What could be the next area of focus?
One significant aspect of disinflation that’s yet to fully materialize is a slowdown in rental inflation. Private-sector data showed a rapid increase in new rents early in the pandemic, followed by a sharp decline. Many economists believe this trend will eventually reflect in official inflation data, but the process is taking time.
Consequently, housing inflation is still increasing faster than normal, with rent hikes and the cost of owned housing only gradually slowing.
In summary, 2023 brought a surprising relief from inflation, with a slower rate of price increase due to a combination of supply improvements and moderating costs in various sectors. However, the housing market remains a variable factor. The economic world is watching closely to see if this “Inflation Cool Down” will be a lasting trend or if more surprises are in store for 2024. Stay tuned, as this story continues to unfold! 📊👀🌴
