Americans Have Started to Believe Inflation Is Cooling

It matters that inflation is lower now than it was a year ago. It also matters that people’s inflation expectations are moving lower.

The Labor Department on Thursday reported that consumer prices rose a seasonally adjusted 0.3% in December from November, putting them up 3.4% from a year earlier. That compares with a 3.1% year-over-year increase in November. But core prices, which exclude often volatile food and energy items in an effort to better capture inflation’s underlying trend, were up 3.9% from a year earlier—the first time they have risen less than 4% since May 2021.