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1 1 (February 7, 2023)

handle is hein.crs/govekmd0001 and id is 1 raw text is: Congressional ____ aResearch Service Will Inflation Continue to Fall? February 7, 2023 The U.S. economy has experienced high inflation since the spring of 2021, with disagreement over how long this trend will last. Policymakers have debated whether more contractionary fiscal and monetary policy is needed to return to price stability or if it is unnecessary because price stability is already on track to be restored. Inflation has been falling recently, but the current level is still very high-inflation from 2011 to 2020 averaged 1.7%. According to the consumer price index (CPI), inflation stood at a seasonally adjusted 6.4% for the year ending in December, down from the June 2022 peak (9.0%). The question remains whether this trend will continue. What Do the Data Tell Us? Twelve-month inflation rates get the most attention because monthly inflation is volatile. However, currently those rates are not necessarily indicative of the most recent trends, because they include the very high monthly changes in January through June 2022. Assuming those increases are not repeated in future months, they will roll out of the 12-month rate in future months, automatically causing the 12-month change to decline. For example, energy prices rose 11% and headline inflation rose 1.2% in a single month in March 2022 (see Figure 1). In March 2023, those increases will fall out of the 12-month change. Congressional Research Service https://crsreports.congress.gov IN12091 CRS INSIGHT Prepared for Members and Committees of Congress -

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