National inflation rate hits a 3-year low. Here’s what that means for consumers

LEXINGTON, Ky. (LEX 18) — The U.S. Bureau of Labor Statistics released its monthly consumer price index report last week, revealing the inflation rate hit a low in September, a rate that has not been seen in three years.

That could mean a more stable economy heading into the holiday shopping season. The overall consumer price index increased 2.4% from last September, the smallest year-over-year increase since February 2021, when the increase was just 1.7%.

The report comes as average price increases begin to plateau for food and apparel, and prices begin to deflate for gasoline and vehicles.

Inflation over time

The Federal Reserve has historically viewed a 2% annual increase as a target inflation rate. In the last 20 years, the lowest annual rate was recorded in July 2009, when a -2.1% rate was recorded at the end of the recession.

The highest annual rate in that time frame was in June 2022, when inflation reached 9.1%.

During the COVID-19 pandemic, the inflation rate remained above 3% between April 2021 and June 2024.

A local perspective

At Critchfield Meats, a butcher and family market located in Lexington, president Mark Critchfield detailed the impact of inflation on business and on customers.

“People are bargain shopping and just trying save anywhere they can with their groceries,” he said.

Between the COVID-19 pandemic and wage inflation, the family business faced several challenges. Critchfield said he’ll be more relaxed about the state of the economy in the next several weeks, once the general election is over.

“When you say inflation is down, it doesn’t mean the prices have come down from where they were three years ago. They’re still up,” he said.

Inflation rate vs. price

Critchfield’s distinction is one Mike Clark, director of the Center for Business and Economic Research at the University of Kentucky, also made.

“All of these individual prices are changing, but it’s the basket that we’re concerned about. When we’re talking about inflation, it’s how much is the average price of things that we consume going up? How fast is it going up?”
Clark said.

He said the latest CPI report is good news for consumers. It could also serve as a signal to the Federal Reserve to adjust interest rates.

“As we continue to see inflationary pressures ease, that will allow them to reduce interest rates even further,” Clark noted.

Will the trend continue?

Clark anticipates the inflation rate will remain steady through the end of the year.

“Really, the trend is likely to continue at least for the next few months,” he said.

That will get consumers through the holiday season, barring any unexpected changes. The end of the year is a critical time at Critchfield Meats, and Mark Critchfield expects it to be a successful one.

“People are still going to eat. And for the holidays, they want the best and that’s what we try to give them,” he said.

He anticipates turkey prices will be down significantly this year from last year, which could be critical to their “make or break” season.

With a more stable economic outlook, consumers may feel more comfortable to fill up their cart and head to checkout, whether it’s the local market or the mall.