Greg McBride, chief financial analyst at Bankrate.com, joined Cheddar News to discuss inflation trends. “I think with strong confidence that peak inflation is behind us, the trend is definitely one towards continued improvement but we've got a long way to go,” he said.

Inflation Showing Signs of Easing

joining me now is Greg Mcbride, chief financial analyst at Bankrate dot com. Greg. What does this mean for consumers? Well the consumers by and large, they're still waiting for the relief. Yes. From a headline level, the C. P. I. Appears to be moving in the right direction. It met expectations. But a lot of that was because we saw a 9% decline in gas prices in december and that masks I think there are still some trouble spots. We continue to see outsized increases and the type of categories that people stay and spending every single month shelter food, electricity, natural gas, apparel, motor vehicle insurance. I mean all of those uh continue to rise consistently and at an outsized pace. So until we see that broader type improvement, it's gonna be hard to say that we've got inflation under control and also that's that's really what households are going to need on the positive though. Greg, are we starting to see a pattern form, This is 1/6 straight month in december. That the pace of price gains actually came down. And can consumers believe Greg that that pace of price gains will continue to decelerate and we are definitely moving in the right direction. You mentioned six months in a row, the year of the year rate has come down. Yes. We we we can say, I think with strong confidence that peak inflation is behind us, the trend is definitely one towards continued improvement but we've got a long way to go inflation 6.5% on a year over year basis. The target is to uh we do think inflation is gonna come down more this year, there's a lot of debate about is it going to come down as fast as expected? If not, that would force the Fed to stay aggressive. So how do you expect Greg based on what we've seen the past six months, the Fed will act come the end of january at its next policy meeting. I think today's report really tips the scales in favor of that quarter point rate hike at the next meeting. You know, they've been playing kind of coy lately keeping both options open, whether it be a quarter point or a half point, but you know, given the momentum we're seeing on the inflation front, I think that we will see them down shift to a quarter point pace, but that doesn't necessarily mean that the stopping point is any different. It just means that they can take shorter, more deliberate steps to get there and in terms of what this might mean for the stock market and for investors, we still see stocks clinging to gains today Greg, but they are off their best levels of the session? The NASDAQ having a great week of four out of four days as we approach these final 40 minutes of trade, do you think this might be a positive for stocks in 2023 if inflation comes down faster than expected and the Fed is able to move to the sidelines then? Yes, because that really is sort of all the ingredients to not only uh you know, keeping the Fed on the sidelines, but then dating recession, the type of things that are positive for corporate earnings and will ultimately drive stock prices. If inflation proves to be more stubborn, that's going to keep the Fed in the business of raising rates and that's where the concerns about recession and its impact on corporate earnings come into play. So stocks really going to continue to I think take the key based on inflation and the labor market Greg, it's always good to get your tank. Thank you for joining I think from sunny florida. That's Greg Mcbride, chief financial analyst at Bankrate dot com.