What May’s 2.4% Inflation Means for Your Financial Plan

Inflation is slowing down—but what does that mean for you?

The latest May CPI report for 2024 showed inflation at 2.4%, marking the lowest rate in more than three years. For everyday consumers, it’s a welcome sign that price increases are starting to ease up. For investors and savers? It opens up a lot of new questions—and possibilities.

So let’s unpack what this could mean for your financial picture, and how we’re thinking about it with the families we serve.

First, a Quick Refresher on CPI

The Consumer Price Index (CPI) tracks how much prices have risen over time for common goods and services—things like groceries, transportation, and housing.

When CPI is high, your money doesn’t go as far. When it cools off, like it has recently, that pressure starts to lift.

But a lower CPI doesn’t mean prices are dropping—it just means they’re not rising as quickly. The prices you see at the grocery store probably haven’t gone back to 2019 levels. Still, the slower pace of inflation is a sign that the broader economy is settling down after a few very volatile years.

What Could Happen with Interest Rates

One potential impact of lower inflation is a shift in Federal Reserve policy. The Fed has been keeping interest rates high to help bring inflation under control. If the trend continues and inflation stays near the Fed’s 2% target, we may see a change in direction.

While we can’t predict exactly when or how that will happen, a future reduction in interest rates could influence:

• Lending and mortgage rates

• Returns on cash holdings or short-term investments

• Market expectations and investor behavior

Again, these aren’t guarantees—just possibilities we’re keeping an eye on.

What We’re Watching for Clients

We’re reviewing several factors with clients right now in light of the latest CPI data. Here are a few examples:

1. Re-evaluating debt or refinancing opportunities

If interest rates come down, there may be a chance to refinance existing debt at a lower cost. This depends heavily on your individual credit situation, loan terms, and timing, so it’s worth evaluating case-by-case.

2. Reviewing short-term savings strategies

If yields on high-interest savings accounts or CDs begin to dip, it could be a good moment to revisit whether those vehicles still make sense for your goals—particularly if you’re holding more cash than usual.

3. Checking asset allocation for alignment

A changing interest rate environment can affect both equity and fixed-income investments. This may be a time to review whether your portfolio is still aligned with your risk tolerance, time horizon, and long-term goals.

Inflation Down ≠ Risk Gone

While the CPI trend is encouraging, market and economic risks remain. Geopolitical tensions, consumer behavior, election-year policy shifts—these and other factors can all affect market movement.

That’s why financial planning is never static. It’s a process that evolves alongside the economy and

your life.

Next Steps

If you’re wondering how these inflation numbers—and potential interest rate changes—might affect your financial plan, we’d love to talk.

Our role at Halter Ferguson Financial is to help you navigate these changes with confidence, not guesswork. We take the time to understand your complete financial picture before making any recommendations, and we always tailor our guidance to your unique needs.

Want a second look at your current strategy? Let’s have a conversation. We’re here to help you stay on track, no matter what the data says next month.

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Disclosures & Disclaimers: This content is for informational purposes only and should not be considered financial, investment, or legal advice. Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal. Please consult with a qualified financial advisor before making any decisions based on this information.