High inflation is still causing hardships, but any slowing of price increases, if it can be sustained, will provide some modest relief.
There are three factors that could lead to inflation which include demand-pull inflation, cost-push inflation and built-in inflation.
Consumers' resilience in the face of sharply higher prices suggests that economic growth is rebounding in the current April-June quarter. The economy shrank at a 1.5% annual rate in the first quarter, mostly because of an increase in the trade deficit. But analysts now project that, on an annual basis, it's growing as much as 3% to 4% in the current quarter.High inflation appears to be forcing consumers, on average, to save less. The savings rate fell to 4.
Still, inflation remains painfully high, and it's inflicting a heavy burden in particular on lower-income households, many of them Black or Hispanic. Surging demand for furniture, appliances and other goods, combined with supply chain snarls, began sending prices surging about a year ago. A better-known inflation gauge, the consumer price index, earlier this month also reported a slowing in price gains. The CPI jumpedYet rising prices of gas and food, worsened by Russia’s invasion of Ukraine, will keep measures of inflation painfully high at least into the summer. The national average price of a gallon of gas has reached $4.60, according to AAA. A year ago, it was $3.04.
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