Good News for Consumers: Inflation Is Finally Slowing Down

It's a positive sign heading into 2023.

For months on end, consumers have been grappling with rampant inflation. And since the start of the year, many people have either dipped into their savings, racked up debt on their credit cards, or both, just to cover basic living costs like food, shelter, and transportation.

But while inflation is still a problem, new data shows that it's finally slowing down. And that's great news heading into 2023.

Relief could be on the way

The Consumer Price Index (CPI), which measures changes in the cost of consumer goods, rose 7.1% on an annual basis in November, according to the Bureau of Labor Statistics. Now to be clear, that's still a high inflation reading.

But here's why it's not so bad. In October, the CPI rose 7.7% on an annual basis. So November's reading is substantially lower.

Also, economists were expecting November's annual CPI reading to come in at 7.3%. So the fact that it registered a lower number is a good thing.

It's also worth noting that the CPI only rose 0.1% from October to November. Economists were predicting a 0.3% jump. And in October, the CPI rose 0.4% compared to September. So not only is the index showing a lower reading on an annual basis, but also, a monthly one.

What all of this means is that inflation seems to be cooling. We're not yet at a point where we can say that living costs have dropped back down to normal, moderate, or even manageable levels. But these numbers indicate that we're on the way there.

Now unfortunately, we're also not going to start off 2023 in a much better place than we are now with regard to living costs. But is it fair to assume that the cost of living will be more affordable by mid-2023, or by the end of the year? Absolutely.

Making the most of your income

While it's great to see inflation levels starting to drop, the reality is that some people might still be in a very tough spot financially. If you're having a hard time paying bills, do your best to stretch your paycheck over the next few months by cutting back on non-essential costs and finding ways to lower your essential costs. That could, for example, mean seeking out more supermarket sales to lower your grocery bills.

At the same time, a lot of companies have plans to give out raises in 2023. So while we may be kicking off the new year with still-high inflation, your paycheck might get a nice lift. That extra money could make it possible to cover your expenses and even leave you with a little room to pad your savings account.

And if you're not getting a raise, you could always try to pick up a side job until the cost of living becomes more manageable for you. Thankfully, the gig economy is still booming, so if your primary employer won't be increasing your pay, you can take matters into your own hands and score yourself an income boost anyway.