When will prices drop and how can you save money?

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It’s no secret that everything from groceries and gas to plane tickets and rent is more expensive than before, and many Americans are wondering when prices will return to the normal”.

The short answer is that it is largely based on a variety of factors influencing today’s record high inflation – post-pandemic consumer demand, continued supply chain shortages, geopolitical events, the war in Ukraine – and there are different views on how most of these factors will play out.

Here’s what the experts are saying about when prices might stabilize.

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There’s no clear answer on when prices will drop, but it’s not too far off

Determining when prices will fall again involves estimating large-scale contributors, such as when global supply chain issues will be resolved and when Federal Reserve interest rate hikes will occur. slow the economy enough to reduce inflation. For this reason, and because think tanks, research organizations and economists use different reasoning, it is difficult to give a clear answer.

Some, like Alan Blinder, a Princeton economics and public affairs professor and former Fed vice-chairman, suggest inflation won’t last for years. “One day, hopefully soon, food and energy prices will stabilize and supply chain issues will dissipate,” Binder wrote in a recent Wall Street Journal op-ed. When that happens, Binder says, “…inflation will fall as quickly and dramatically as it has risen. We’ve seen that before.”

In other words, prices could drop all of a sudden. Blinder also adds that raising interest rates will not be the ultimate solution to reducing inflation.

Investment research firm Morningstar gives a more accurate forecast, saying prices will fall precipitously by next year.

Morningstar looks at the Personal Consumer Expenditure Price Index, also known as the PCE Price Index, which is the Fed’s preferred measure of inflation. You may have heard of the Consumer Price Index (CPI) as a measure of inflation, but the PCE captures a broader scope and better reflects the change in consumer spending habits by taking into account the price increase.

The Fed uses the PCE price index when referring to its 2% inflation target, Preston Caldwell, head of U.S. economics for Morningstar, told Select. For context, the latest data from the PCE price index shows that the year-over-year inflation rate is 6.3% in April 2022.

But in Morningstar’s second-quarter “US Economic Outlook,” researchers predict that 2022 will see the highest rate of inflation, as measured by the PCE price index, at 5.2%, before falling. Caldwell estimates that the inflation rate will average around 1.5% between 2023 and 2025.

“While the consensus has largely given up on the ‘transitional’ history of inflation, we still believe that most sources of today’s high inflation will decline, and even reverse, over the next few years,” Caldwell said. “That includes energy, autos and other durable goods. Concerns about inflation widening to the rest of the economy, notably via high wage growth, seem overblown.”

Consumers can therefore expect this year to be the worst for inflation, with prices expected to fall by 2023, according to the latest research from Morningstar.

How to save money and maximize your spending when prices are high

Although the effects of inflation are mostly unavoidable, there are some areas where you can reduce your spending to lessen its impact on your wallet. For example, meat, poultry, fish and eggs are among the foods whose prices are increasing the most. You can therefore consider implementing a meatless meal one or more days a week, or replacing meat in a dish with cheaper ingredients such as vegetables.

However, there are only a few things you can avoid when shopping. That’s when a rewards credit card can come in handy. This way you earn at least Something in exchange for so much expense.

The Blue Cash Preferred® card from American Express is an excellent choice for offering supermarket rewards. Cardholders earn 6% cash back at US supermarkets on up to $6,000 per year in purchases (then 1%). You’ll also score points at the pump with 3% cash back at US gas stations. Cash back is received in the form of reward dollars that can be redeemed as statement credit, reducing your credit card bill. The card also offers a welcome bonus of $300 statement credit after spending $3,000 on purchases within the first six months of card membership – a significantly longer timeframe than most welcome offers. .

Blue Cash Preferred® Card from American Express

On the secure site of American Express

  • Awards

    6% cash back in US supermarkets on up to $6,000 per year in purchases (1% thereafter), 6% cash back on select US streaming subscriptions, 3% cash back cash at US gas stations, 3% cash back on public transportation including taxis/rideshare, parking, tolls, trains, buses and more and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars which can be redeemed as statement credit.

  • welcome bonus

    Get a $300 credit after spending $3,000 on purchases with your new card in the first 6 months.

  • Annual subscription

    $0 annual introductory fee for the first year, then $95

  • Introduction AVR

    0% for 12 months on purchases from the date of account opening; N/A for balance transfers

  • Regular APR

  • Balance Transfer Fee

  • Foreign transaction fees

  • Credit needed

To minimize your gas expenses, look for apps like GasBuddy that can help you find the cheapest gas prices near you. GasBuddy also has a rewards card that connects to your bank account and offers up to 25 cents off a gallon – it’s not a credit card and won’t affect your credit score.

You can also use a gas rewards credit card like the PenFed Platinum Rewards Visa Signature® Card, which offers the highest rewards rate on gas. Cardholders earn 5X points on gas purchases at the pump and at electric vehicle charging stations. In addition to earning at gas stations, cardholders also get unlimited 3X points for shopping at supermarkets. Keep in mind that PenFed is a credit union, so membership is required to open this credit card. Anyone can join by taking a few more steps: apply, open a savings account with a $5 deposit, and maintain an account balance of $5.

PenFed Platinum Rewards Visa Signature® Card

  • Awards

    5X points on gas purchases at the pump and at electric vehicle charging stations, 3X points on supermarket purchases, 1X point on all other purchases

  • welcome bonus

    15,000 points when you spend $1,500 within the first 3 months of account opening

  • Annual subscription

  • Promotion April

    Promotional balance transfer rate of 0% for 12 months on transfers completed by September 30, 2022.*

  • Regular APR

    14.49% to 17.99% variable on purchases; 17.99% non-variable on balance transfers

  • Balance Transfer Fee

  • Foreign transaction fees

  • Credit needed

*After the promotional balance transfer period, the APR of the outstanding balance and any new balance transfers will be 17.99%. A 3% balance transfer fee applies to each transfer. This transaction is subject to credit approval. If you take advantage of this balance transfer, you will be immediately charged interest on all purchases made with your credit card unless you pay the entire account balance, including balance transfers, in full each month before the payment due date.

For rates and fees for the Blue Cash Preferred® Card from American Express, click here.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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