--- title: How Low Could Inflation Go in 2023? Here Are 4 Expert Predictions description: Record-high inflation is easing, and predictions from the Federal Reserve, Goldman Sachs and others forecast much lower inflation in 2023. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2022-11-14T19:44:20.000Z' modified: '2024-01-10T13:21:55.000Z' section: Economy and Politics tags: - inflation - News word_count: 516 canonical: https://money.com/inflation-2023-expert-predictions/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Woman cashier at a supermarket store](https://img.money.com/2022/11/News-PredictionsHow-Inflation-Will-fall-2023.jpg?crop=0px%2C127px%2C2880px%2C1620px&quality=85) After inflation data came in better than expected last week, investors celebrated and [stocks](https://money.com/how-to-buy-stocks/) had their [best day since 2020](https://money.com/stocks-best-day-since-2020-outlook/). Investors and shoppers will have more to celebrate if inflation falls even further next year, like many experts are forecasting. The Federal Reserve has been [raising interest rates](https://money.com/fed-interest-rate-hike-september-2022/) for months in an attempt to curb inflation, which by one measure had been running at a 40-year high [over 8%](https://money.com/inflation-food-rent-price-increase/) for much of 2022. Last week’s data was a welcome sign that price growth is finally beginning to slow down, and that household budgets would finally see some relief. And there could be more where that came from. Here’s what experts are saying about inflation in 2023. Over the weekend, analysts from Goldman Sachs forecast that one key measure of inflation — the core price consumption expenditures index, or core PCE — could drop to 2.9% by the end of 2023. Core inflation is different from headline inflation. Core inflation excludes food and energy prices, which tend to swing more frequently and dramatically than other prices. The Federal Reserve keeps a close eye on core PCE inflation, and targets a level of 2% in a healthy economy. (To make it even more confusing — these numbers are different from inflation measured via the consumer price index, or CPI, which came in at [7.7% on an annual basis in October](https://money.com/inflation-report-stocks-soaring/), down from [8.2% in September](https://money.com/items-prices-rising-faster-than-inflation/).) Right now, core PCE is at 5.1%. Goldman’s experts expect that number to drop as supply chain constraints improve, [rental price growth slows down](https://money.com/rent-prices-drop-affordability-problem/), and wage growth slows down, too. Those three factors are signs the economy is on its way back to a healthier state. Other experts agree, though some are more optimistic than others in terms of how low inflation could go. Economists from the Conference Board, a non-partisan business think thank, are projecting core PCE to fall to 2.8% on an annual basis in 2023. Economists from the Federal Reserve [expect](https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf) core PCE inflation to fall to about 3.1% next year, while Morningstar’s analysts [forecast](https://www.morningstar.com/articles/1113268/why-we-expect-inflation-to-fall-in-2023) headline PCE inflation will average 1.7% between 2023 and 2026. ## Why inflation will drop in 2023 (probably) In a blog post, Preston Caldwell, head of U.S. economics for Morningstar Research Services, notes that certain categories of goods — like [cars](https://money.com/buy-new-car-strategies-tough-market/) and energy — have been the primary drivers of inflation over the past year or two. He expects pressures affecting those industries (the semiconductor shortage, for instance, along with supply chain snags and disruptions caused by the war in Ukraine) to ease up. Between that normalization and higher interest rates, Caldwell says inflation is on its way back to normal levels. “Fed tightening will cool off the overall economy substantially in 2023 and 2024, extinguishing the inflationary fire before it spreads to the broader economy,” he writes. [Inflation Is Rising Slower Than Expected, and Stocks Are Soaring](https://money.com/inflation-report-stocks-soaring/) [Stocks Just Had Their Best Day in Over 2 Years. Here's What Investors Can Expect Next](https://money.com/stocks-best-day-since-2020-outlook/) [The Fed May Slow Down Its Rate Hikes, but Investors Shouldn’t Celebrate Yet](https://money.com/fed-interest-rate-hike-november-2022/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/inflation-2023-expert-predictions/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Inflation", "item": "https://money.com/inflation/" }, { "@type": "ListItem", "position": 4, "name": "How Low Could Inflation Go in 2023? 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