VIRGINIA – The numbers are in and inflation is stalling at just over 3 percent. The latest Consumer Price Index report for February shows that grocery prices stayed consistent, but gas, electricity and rent are up.
Virginia Tech Professor of Economics Dr. Jadrian Wooten said even if inflation goes down, that doesn’t mean prices will drop. Instead, they’ll just rise at a slower pace.
He said we’ll also have to wait longer before the Federal Reserve lowers interest rates until inflation drops to about 2 percent.
“Part of the problem is that even with these higher inflation rates, people are still continuing to spend money on stuff. And so until that changes, it’s unlikely to come back down,” said Wooten.
On the flip side, while deflation might sound nice, Wooten said that wouldn’t be a good thing because that would mean salaries and wages would drop.
Wooten said the good news is that it’s unlikely the Federal Reserve will raise interest rates again to curb spending.