While this week’s inflation report came in slightly hotter than expected, showing that consumer prices in the U.S. have risen by 6.4 percent over the past 12 months, it was still the lowest annual increase since October 2021. It was also the seventh consecutive month of declining year-over-year inflation, continuing the disinflationary trend that even Fed chairman Jerome Powell acknowledged earlier this month.

And as some people might think: “Great, inflation is cooling. Now when will prices be back to normal?” it’s important to distinguish between disinflation and deflation. What we’re currently seeing is disinflation, i.e. a deceleration of price increases (yes, increases). For the overall price level to actually come down, the inflation rate would have to drop below zero, which would signify deflation. While the Fed desperately wants inflation to come back down, it is aiming for 2 percent inflation, not deflation, because the latter creates a whole set of problems on its own.

As the following chart shows, the rate of inflation (yellow line) has come down quite a bit from its June 2022 peak. Consumer prices (blue line) continue to climb, however. So while some prices will certainly come back down from their peaks as supply chain disruptions and global crises recede, the overall price level will remain elevated and us mere mortals are left with hoping for wages to eventually catch up.