Inflation Likely to Last into 2023

Inflation is all the talk these days, and everyone wants to know when it will start to come down. According to the Congressional Budget Office, Americans can expect high inflation to run into next year. Because of that, the federal government will likely have to pay higher interest rates on its debt.

According to the study, the consumer price index is projected to increase 6.1% this year and 3.1% in 2023. Currently, inflation is rising 8.3%, so it’s an improvement, but still higher than the long-term baseline of 2.3%.

“In CBO’s projections, elevated inflation initially persists in 2022 because of the combination of strong demand and restrained supply in the markets for goods, services and labor,” the report states. “Inflation then subsides as supply disruptions dissipate, energy prices decline and less accommodative monetary policy takes hold.”

One bright light in the report is that this year’s annual budget deficit is projected to be $118 billion lower than in 2021. The lower deficit is due to consistent job growth over the past year and less pandemic-related spending.