For the first time in over a year, inflation is down. At 3.2%, it’s almost where the Federal Reserve wants it to be. The target is around 2%.
Dorene Ciletti, marketing professor at Point Park University, says that typically means we’re getting closer to the point where the economy is more balanced. But she says we’re not there yet.
“In this case, while inflation is coming down, demand might be slowing a bit, but we’re really not seeing a subsequent price decrease,” said CIletti.
Ciletti says with demand slowing, you would expect prices to be down for some products, like groceries and services. But higher gas prices and extreme weather patterns, like record-breaking heat, are keeping some prices high. There is some good news, however.
“Because we did have that high inflation, you know that our government raised interest rates. And as a result, we’re starting to earn money on our cash,” said Alison Wertz, certified financial planner with Bill Few Associates in Mt. Lebanon.
“If you know you’re not going to need your funds for six months, or a year, you might consider a certificate of deposit,” she said.
CDs can earn you 5%. Also, shop around for a high-yielding, or higher-interest savings account.
“The one thing that people should definitely look at is are they getting a competitive rate on their cash savings,” she said.
Those interest payments grow over time, helping you to build your savings. Wertz says if you’re searing for a high-yielding savings account, make sure that it is FDIC insured, which protects your money up to at least $250,000 if the bank were to fail.
Ciletti says consumers are looking for value right now and searching out ways to save, but overall, consumer confidence is up.
“I wouldn’t say they’re feeling comfortable, but they’re still feeling like they can spend some money,” said Ciletti.
Economists say that spending could stimulate the economy as we move into the fall.
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