STATE WIDE–You might be paying less for some things when inflation finally goes down. But, for much of the food you buy and other costs, the inflated prices may be permanent, say some economists.
“I think overall consumers should expect this is gonna be a five to ten percent overall increase in the cost of living moving forward,” said Ball State Economist Mike Hicks, talking to WISH TV. “Things like really fresh meat, gasoline, and some basic food stuffs like rice, corn, potatoes might come back down.”
But, Hicks said for most manufactured products, you may be stuck with prices comparable to what you’re paying now.
“So, about half of the overall inflation is gonna be with us.”
Pres. Biden said in a speech Tuesday at the White House that he believes the Inflation Reduction Act will help compensate for inflation by reducing the cost of prescription meds and health insurance, artificially capping the prices of some medications. But, the Congressional Budget Office predicts the overall effect on inflation will be negligible.
That means that inflation will come down slowly, and it may happen mostly as the result of increased interest rates softening demand for some products. In other words, the more things cost the more people learn to do without them, so the prices come down.
“So, if we raise interest rates and the pace we’re raising now is…three quarters of a percent every six weeks or so, at that rate we’re beginning to see it biting into demand,” said Hicks.
But, for now, your budget is going to continue taking a hit, despite gas prices coming down some.
“The benefit from the lower-cost gasoline hasn’t fully worked through in energy prices and we’re continuing to see the restraints on supply and the lower value of the dollar due to previous inflation playing out on consumer prices.”
Hicks also told the TV station that Hoosiers on average, have an income about 85 percent of the national average. So, while most people are making less and paying more, you are making even less and still paying more.