“It makes sense that the recent run of inflation would leave a psychological scar. After all, the peak inflation rate of 9.1 percent in June 2022 was not only the highest annualized rate seen in more than four decades, it was also more than twice as high as the average inflation rate in any year since 1991. That means prices were rising two to three times more quickly than during the worst bout with inflation that most Americans can easily recall.
In March, the annual inflation rate was 3.5 percent. Yes, that’s 60 percent lower than the peak rate in June 2022, but that’s still higher than the average annual rate in every single year between 1991 and 2021, except for 2008.
Meanwhile, higher interest rates are likely compounding the perception that inflation is a major problem.
From an economic perspective, those higher interest rates are necessary to calm inflation. But from a consumer’s perspective, the money in your wallet now has less buying power and it’s more expensive to borrow money for a car loan or mortgage. It’s a squeeze from both directions.”