- Treasury Secretary Janet Yellen expects inflation to come down significantly next year.
- Lower shipping costs and gasoline prices will help curb rising prices, she told CBS on Sunday.
- Inflation will fall even if the economy does not slip into a recession in 2023, Yellen said.
Inflation is expected to slow significantly over the coming year, even in the absence of a recession, as long as the US economy is not shaken by new shocks, according to Janet Yellen.
“There is a risk of recession, but it is certainly not, in my opinion, something necessary to bring inflation down,” the Treasury Secretary told CBS’s “60 Minutes” program.
Accelerating inflation has been one of the dominant themes for markets and the economy in 2022.
The U.S. consumer price index climbed 7.7% in its latest October reading, compared with an 8.2% increase the previous month. Although this suggested inflation is starting to ease slightly, it is still well above the Federal Reserve’s 2% target.
Many economists and businesses expect a recession to hit the United States in the first half of next year – and that could help further curb rising prices by suppressing consumer spending.
Yellen said she was confident inflation would start to come down significantly in 2023 even if there was no recession, thanks to lower shipping costs and lower oil prices. energy.
“First of all, shipping costs have gone down – delivery times, which were very long, have gotten shorter,” she said. “Gas prices are falling – I think we will see a substantial reduction in inflation in the coming year.”
“By the end of next year, you will see much lower inflation if there is no unforeseen shock,” Yellen added.
The White House has repeatedly praised the fact that energy costs fell despite Russia’s invasion of Ukraine in February, with average pump prices falling 35% from their June high of $3.26 per gallon, according to AAA.
The government is working to control consumer prices in conjunction with the Fed, which has raised interest rates by 375 basis points this year to contain inflation.
Yellen told CBS that the Biden administration is trying to avoid the rise in prices becoming entrenched, as well as a repeat of the combination of high inflation and slow growth that has weighed on the economy. American economy for much of the 1970s.
“We have learned many lessons from the high inflation that we experienced in the 1970s and we are all aware that it is extremely important that inflation be brought under control and not become endemic to our economy,” he said. she stated. “We’re making sure that won’t happen.”
Read more: The Fed cuts rates by 200 basis points and oil drops to $40 a barrel are among Standard Chartered’s list of potential surprises for 2023
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