Will Inflation Be Gone by 2024?

Inflation is the sort of thing most people don't really focus on until it begins to soar. And that's precisely what started to happen around mid-2021.

Earlier that year, lawmakers approved a round of stimulus checks that put $1,400 checks into Americans' bank accounts. That put consumers in a position where they had extra money to spend at a time when supply chains were getting battered. That led to a disconnect between supply and demand, and rampant inflation ensued.

In May 2021, the Consumer Price Index (CPI), which measures changes in the cost of consumer goods and services, rose 5% on an annual basis. Inflation levels then continued to climb, eventually peaking in June of 2022, at which point the CPI was up 9.1% on an annual basis.

But inflation has been cooling pretty steadily since the start of 2023. Granted, July's annual CPI reading was slightly higher than June's, coming in at 3.2% (compared to 3% a month prior). But despite that blip, it's clear that inflation today isn't close to where it was about a year ago, and that's good news for consumers.

But will inflation be gone by 2024? Not exactly. Inflation is the sort of thing that never really goes away. Ideally, it just sits at a level that's not particularly bothersome.

A persistent thing

Inflation is sort of a natural phenomenon that tends to persist over time. And usually, it's not so problematic. Often, wage growth keeps pace with inflation to a reasonable degree so that consumers don't lose a ton of buying power from one year to the next. It's when inflation surges like it did in 2021 into 2022 and beyond that it causes problems.

The Federal Reserve, which oversees monetary policy for the U.S., acknowledges that inflation is something that generally can't be helped. And the Fed itself is satisfied with an annual inflation rate of 2% in the long term. The central bank feels that this level is conducive to economic growth and stability.

As such, consumers should not necessarily expect 2024 to be an inflation-free year. But could annual inflation get down to 2% in 2024? That's certainly possible.

Protecting yourself against inflation

One situation where inflation tends to become problematic is retirement. The money you sock away for your senior years now has the potential to be worth less in three or four decades. So it's important to invest your money in a manner that's likely to outpace inflation. And in that regard, the stock market may be your best bet.

Over the past 50 years, the stock market, as measured by the S&P 500, has delivered an average yearly return of 10%. So if you're 30 years away from retirement and your portfolio delivers a similar return, you're likely to end up in really good shape, even if annual inflation persists at 2% during that time.

The past couple of years have led consumers to believe that inflation is something to worry about. Usually, it's not -- at least not regularly. But it's also important to be aware that inflation isn't a short-term trend. Rather, it's something you should expect to be grappling with to some degree for the rest of your life.