Inflation easing, but what pace is tolerable for consumers, investors and the Federal Reserve?

Inflation overall likely continued falling in December, but prices kept increasing much faster than they have in many years. This is the conundrum consumers, investors and central bankers with the Federal Reserve keep struggling with — slowing, yet still fast inflation.

For years, inflation was like the speed limit in a school zone — slow and steady. Then, due to lots of factors, prices didn’t just accelerate, they blasted off about one year into the COVID-19 pandemic that started in March 2020. The speed of some price hikes was blinding. Gasoline prices jumped more than 50%. Used-vehicle prices were up 45%. Bacon increased more than 10%.

That was the spring and summer of 2021, as consumer inflation sped up on its way to hitting a 40-year high in June 2022. Since then, fortunately the upward trajectory has eased. Yet, the annual inflation rate remains more than three times its speed during the decade prior to the pandemic. In terms of pacing, we remain far from returning to the school zone.

The December Consumer Price Index data will be released Thursday.

The headline number is expected to show a continued slowdown compared to inflation advances a year ago. That’s good news for consumers. It will support Federal Reserve policymakers who want to downshift the pace of their interest rate hikes. And it might be welcomed by investors, as evidence pricing pressures on consumers and companies are easing.

Still, inflation will remain far above the speed accepted by the Fed. And it still won’t be comfortable for

JULIA NIKHINSON AP Surging prices for gas, food and rent catapulted U.S. inflation to a new four-decade peak in June 2022. Since then, the pace of consumer price increases has slowed.