Photo-Illustration: Intelligencer. Source Image: CSA/Getty Images

Could it be? After a year and a half of false twilights on this period of runaway inflation — month after month of thwarted predictions that we’d be entering a period when costs stabilize as supply chains got fixed and rising interest rates sobered everyone up — the Labor Department released a report Thursday showing that prices are starting to come down in a meaningful and sustained way. In October, the annual inflation rate, as measured by the Consumer Price Index, was 7.7 percent, the lowest it’s been since January. Remember January? It was before the war in Ukraine instigated a crisis in oil, food, and the global money supply. That’s kind of like where we’re at now, except that, instead of things getting worse, things are actually, finally, hopefully — dare I say probably — going to get better.

Look: An editor here at New York told me he paid $3 for a Cliff Bar this morning, so it’s not like everything is all of a sudden affordable. And there are other signals that the economy is actually cooling faster than what the inflation rate is showing. For instance, the CPI’s measure for shelter costs is on a lag, so while it showed that it had risen by 0.8 percent in October, more granular data from Redfin and Zumper are showing the opposite. (Home purchases have fallen off a cliff, too.) Other big costs appear to be moderating with used car prices dropping more than 2 percent. At the rate it’s going now, the inflation rate would be a little more than half what it was in June, when it peaked. So it’s not back to the Obama-era days where the price of everything basically froze in place for most of the decade, but it’s definitely more manageable.

And the thing is, it’s likely to keep getting more manageable as we go into 2023. If things are unaffordable, go get a new job — there are like 10 million openings right now. This is the Goldilocks period, where it’s possible to lock in a pay bump based on the last year of inflation, just as that rate is starting to slow, making the buffer in your pay stretch a little bit longer. The Federal Reserve has already signaled it will start to ease up on its money-destroying interest-hiking policies in the next couple of month. The relatively light October inflation print gives more credence to the theory that they’ll start doing it earlier rather than later.

These milder inflation numbers — suggesting an easier interest-rate policy ahead — are catnip for Wall Street. The Dow Jones Industrial Average spiked about 1,000 points, all but erasing a steep, fear-driven sell-off that’s been driving markets downward since late August. Plenty of investors see this report as a signal that the worst of it is over and the war against inflation is basically won. Of course, any number of things could break from here on out, plunging the economy into another crisis — anything from a deep recession to another round of inflation. But until then, maybe it’s okay to breathe a sigh of relief.

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