Americans Just Got Good News on Inflation. Here’s What it Means for You

Inflation has been a major thorn in Americans’ sides since 2021. It started creeping upward that year when a combination of supply chain backlogs and generous stimulus policies fueled a rapid uptick in consumer spending.

Inflation peaked in mid-2022 and has been cooling since. But it’s still been elevated since the start of the year. And that’s been problematic for cash-strapped consumers.

The Federal Reserve raised interest rates 11 times in 2022 and 2023 in response to rampant inflation. That drove up the cost of borrowing across the board, and consumers are still paying the price in that regard to this day.

But recently, consumers got some good news on inflation. And it could set the stage for some financial relief.

A key index shows a cooldown

In March, the Consumer Price Index, which measures changes in the cost of common goods and services, decreased 0.1% from February. It also rose 2.4% on an annual basis, which is a smaller year over year increase than what we’ve seen in recent months.

The fact that annual inflation only increased 2.4% is good news from an interest rate perspective. The Fed has been committed to targeting 2% annual inflation, since it feels that this level is most conducive to long-term economic stability.

Now that inflation is closer to that mark, the Fed may be more inclined to move forward with another interest rate cut. That could, in turn, bring down the cost of borrowing for consumers.

Right now, for example, you may be looking at a rate you’re not happy with for an auto loan, personal loan, or home equity loan. If the Fed lowers rates, a loan like that could become cheaper.

How to take advantage of slowing inflation

The Consumer Price Index is backward-facing, which means it measures changes that occurred already. It unfortunately does not predict where prices will trend in the coming months. And tariff policies do have the potential to drive costs upward.

However, there’s a lot of pressure on the Fed to lower interest rates. And March’s inflation reading could be the driving force that leads to a near-term rate cut.

What you should do in light of that is check your credit score and see if it needs work. If so, work on boosting it so that if borrowing rates come down, you’ll be in a stronger position to qualify for a loan.

At the same time, if you’re on the cusp of applying for a loan, you may want to hold off a bit longer and see what the Fed does. Waiting a few months could mean locking in a much lower interest rate and saving yourself money on an ongoing basis.

It’s also a good idea to pay attention to prices in stores and see what trends you’re noticing. If you see that prices are better, stock up on essentials when it makes sense to do so.

Some people are stocking up anyway to get ahead of tariff-fueled price increases. Just don’t go overboard to the point where you’re racking up debt, because that could negate any savings you’re able to reap.

The post Americans Just Got Good News on Inflation. Here’s What it Means for You appeared first on 24/7 Wall St..