what does this mean for your wallet?

HUNTSVILLE, Alabama (WAFF) – The Bureau of Labor Statistics reported an inflation rate of 2.9 percent on Wednesday, the lowest in three years.

“We’re not there yet, but we’re heading in the right direction,” said Wafa Orman, an economics professor at the University of Alabama in Huntsville.

Orman said we won't feel the drop in our pockets yet. That's because it just means the prices of things we buy, like food, housing and travel, won't rise as much. But some people aren't convinced.

“Well, I can't say, I can tell you that,” said Pierson Waite, a Huntsville resident. “Every time I go anywhere, it seems like I spend $50 here and $100 there. I'm just filling up my car with gas and it's already $40 or something, and I have to do that once a week.”

Orman says you won't feel this in your spending, but you may see changes elsewhere, such as interest rates.

“They started raising it in 2022 and then raised it very sharply and very quickly,” Orman said. “The purpose of this measure was to reduce the rate of inflation.”

It's a tactic that has worked in the past. The Federal Reserve raises interest rates in the hope that people will save more and borrow less.

“Everyone's savings account is earning more than it has in a long time,” Orman said. “But at the same time, it has become more expensive to borrow money, whether for a house, a car or a credit card.”

However, if inflation reaches the Fed's target level of two percent, these figures could also fall.

“But there's a chance they'll cut rates a little bit or probably leave them unchanged, which is what they did last time,” Orman said.

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