It's been hard to find an economic news story this year without the word "inflation" in the headline. The reality is that higher living costs have been a problem since the second half of 2021, when generous stimulus policies put lots of cash in Americans' bank accounts and created a wide gap between supply and demand that drove prices up.
In fact, this year, many people have had to dip into their savings accounts over and over again to compensate for higher bills. And some have landed in credit card debt as a result of their bills climbing and their paychecks falling short.
But on Dec. 6, Walmart CEO Doug McMillon shared some good news about inflation. And it's something consumers should really take to heart.
Inflation may finally be easing
In a CNBC interview, McMillon said that inflation levels are falling with regard to discretionary merchandise like apparel, sporting goods, and toys. In October, the Consumer Price Index, which measures changes in the cost of consumer goods, rose 7.7% on an annual basis. But that month, toy prices were only up 3.1%, sporting goods were up 3%, and apparel was only up 4.1%.
A drop in inflation across these categories couldn't have happened at a better time. These days, consumers are hitting the stores in droves in an attempt to purchase the holiday gifts they need. And if they're able to spend less in these specific categories, it could help minimize the holiday debt they accrue -- or perhaps prevent them from racking up holiday debt at all.
Coping with inflation
Inflation levels may be dropping in certain spending categories, which is great. But all told, the cost of living is still considerably higher now than it was two years ago. And it could still take quite a bit of time for inflation levels to fall to a degree where consumers get to enjoy widespread relief.
That's why consumers should do what they can to conserve funds during these trying times. For the most part, that means limiting purchases to necessities (though it's understandable that many people may want to make an exception for the holidays, since they only come around once a year). It could also mean taking advantage of the booming gig economy by getting a second job.
There's a reason side hustle culture is something so many have embraced -- that extra work can translate to a world of financial freedom at a time when everything from housing to food to transportation is more of a burden. Plus, working a second job gives people a chance to build savings so they have a cushion in the face of unplanned bills.
All told, we're not done with inflation. But McMillon's update is certainly a welcome one at a time when many people are feeling overwhelmingly frustrated by sky-high costs. And while lower inflation levels on things like toys and sports equipment won't help the same way lower food costs might, it still represents a step in a more positive direction.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.