Although the inflation rate remains too high, it’s expected to continue slowing in 2024.
Here's what's happening: Driven by surging energy prices, the closely watched year-over-year inflation rate climbed from 3.2% to 3.7% in August,. That's still well above the Federal Reserve's target rate of 2%, so it remains a concern.
However, the year-over-year rate should be taken with a grain of salt, as it no longer reflects the dramatic drop from peak prices in summer 2022.where monthly price increases in 2023 seem more significant than they actually are, even though they're growing at nearly half the rate we saw in 2022. "The year-over-year numbers are pretty meaningless at this point," says Daniel Altman, chief economist at Instawork, an online staffing platform."What matters is the current path of prices."Sign up for NBC Philadelphia newsletters.To better gauge where inflation is headed, the Federal Reserve says it's closely monitoring core inflation, a measure of inflation that excludes volatile food and energy prices, which can fluctuate wildly in a given month.
When you look at this measure, inflation is trending in the right direction. In August, core inflation rose by 0.3% after increasing by 0.2% the previous two months. That's less than half the monthly rate we were seeing in early 2022.
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