Inflation has been bruising Americans for more than two years — and it's finally losing some of its punch.
The Labor Department reported Wednesday that the consumer prices in June were up just 3% from a year ago — the smallest annual increase since March 2021. What's more, forecasters say inflation could fall further in the months to come.
But two years of high inflation has left its scars, and people are adjusting their habits, potentially in permanent ways.

Here are five things to know about the state of inflation today.
Inflation has fallen sharply from its peak last year
It was a totally different picture this time last year. Back then, inflation had topped 9%, fueled in part by record-high gasoline prices following Russia's invasion of Ukraine.
Since then, gasoline prices have tumbled more than 26%. And that's having a big impact on the day-to-day lives of many Americans, especially commuters like Kate Blacker from Jersey City, N.J., who travels about an hour each day to her job at a community college.
"I'm a lot less worried now than I was six months ago, eight months ago, when the prices were rising so rapidly and I didn't know when that was going to cool down," says Blacker.
Grocery prices also leveled off last month, in a welcome relief to consumers' budgets.
And in another positive development in the midst of the summer, the price of airline tickets and hotel rooms fell in June, despite strong demand for travel.
Inflation likely has further to fall
Here's more good news: Even lower inflation rates are in the pipeline. Rent was a big driver of inflation in June, but people signing new apartment leases this summer are seeing smaller rent increases than they did a year ago.
That takes time to show up in the government's inflation tally, but the writing is on the wall.
Likewise, the wholesale price of used cars has been falling for several months, so those savings should continue to produce lower prices on dealers' lots.
Omair Sharif, who heads the forecasting firm Inflation Insights, believes the next several months will be marked by mild cost-of-living increases, much like June was.
"This is kind of the leading edge of the summer of disinflation," Sharif says.
Companies may no longer be able to pad their profits
Economist Lael Brainard says some companies added to their profit margins during the last two years of strong inflation — a trend that could soon be reversed.
Brainard served as Vice Chair of the Federal Reserve board before moving to the White House in February to direct the National Economic Council. She points to what she calls a "price-price" spiral, when companies see their costs go up, then raise their own prices even more.
"It will be important for corporations to continue to bring their markups down after having raised them to unusually elevated levels over the past two years," Brainard told the Economic Club of New York Wednesday.
Brainard says those higher markups "should unwind if consumers are more price-sensitive and firms have to compete more intensely."
Many people are becoming more careful shoppers
Two years of high inflation has left a mark on the way people spend money, and some of those changes may be lasting.
Blacker, for example, postponed a trip to Los Angeles this summer, hoping to find cheaper plane tickets in the fall. She also canceled her gym membership, and says she and her partner are more thoughtful now about their food purchases than they used to be.
"We didn't really look so much at the grocery prices before," Blacker says. "It was more like, 'Oh, let's look up a recipe and just get whatever it is that we need.'"
With restaurant prices still climbing, she's also eating out less often.
"It's something we have to be much more conscious about, in terms our budgeting for that," Blacker says.
The Federal Reserve is not ready to declare victory just yet
The data showing easing inflation on Wednesday will likely be greeted as welcome news to the country's inflation fighters, but the battle is probably not over.
The Fed has raised interest rates aggressively over the last 16 months in an effort to curb demand and bring prices under control.
Although the central bank opted to hold rates steady at its last meeting in June, forecasters expect at least one additional, quarter-point rate hike when Fed policymakers meet in two weeks.
If inflation continues to trend down, however, that may just be the last increase in this cycle.

FAFRX (bank loan) continues to do well YTD. Other good ones are GIFIX, then FFRHX. The first two funds...YTD>7%...one year>10-11%...3 year>19-21%. All 3 funds SD is about 4.2.
But that's not all, compare this to PRCPX+TUHYX and you can see that HY has a much higher volatility. You want to achieve higher performance with lower volatility.
YTD Chart(https://schrts.co/CuXmBygK)
To see the volatility use only two funds: BL=FAFRX vs HY=TUHYX. See (https://schrts.co/vsTRCtXv) For YTD from Peaks and troughs, FAFRX was down only 1.5%, but TUHYX lost over 5%

I'm so out of touch. I've been running a business for 45 years and it's actually been profitable. What an idiot.
If I had any brains at all, I would have come up with an idea, raised billions of dollars from investors, and then proceeded to lose money every year, thereby increasing the value tenfold.
More than 40% of the companies in the S&P 500 lost money in the past year. And these are just the public companies with shares sold on the stock exchange. Imagine how many private tech companies, most funded by venture capital firms, are losing money.
It's mind-boggling how they operate. My daughter-in-law worked for one of those private startup tech companies. They found their niche in the CAP Table Management software market, which basically means they'll value your business and tell you who owns what percentage.
Apparently, that's more complicated than it seems. The founders raised $1.2 billion in 2012 and it's now valued at $8.5 billion. They have over 1500 employees and have never been profitable, losing millions and millions every year for 13 years.
They certainly don't seem to care. Like most tech companies, their employee benefits are off the charts. When my daughter-in-law had her first child not long ago, she was given a six-month paid maternity leave. That's par for the course when it comes to the tech industry, but what really blew me away was when she returned to work.
"YOU GOT A 30% RAISE??!!" I remember squealing when she told me it took her by surprise. "YOU WEREN'T EVEN THERE!!"
"Yep, I was shocked," she replied. "Very nice of them."
Six months later, 15% of the employees got laid off in a cost-cutting move. Nothing made sense.
But that's the way it goes in this new startup world. These aren't the businesses I grew up watching, nor are they the businesses I run now. We take excellent care of our employees, but we also like to remain profitable. There's a balance in there somewhere.
The list of deadbeat companies is endless. Uber lost $7.2 billion in 2022, Lyft lost $1.6 billion, Peloton $1.2 billion, WeWork $1.7 billion, Rivian Automotive (Tesla imitator) $6.2 billion. But work at any of those companies and you'll probably get a raise during your maternity or paternity leave.
Enjoy it, because you're likely to get laid off at some point. No company can endure these losses forever. Between January and May of this year, over 200,000 employees in the tech sector were laid off. Perhaps companies are realizing that the objective is to be profitable.
They certainly understand that concept at Google and Facebook. Google laid off 12,000 employees in the last 12 months and Facebook laid off 21,000. Maybe that's why Google had net income of $60 billion in that period and Facebook had net income of $23 billion.
Then there's DoorDash. The food delivery service based in San Francisco lost $468 million in 2021 and a whopping $1.3 billion in 2022. It doesn't take a genius to see it's going in the wrong direction. Someone must have noticed, because DoorDash laid off 1250 employees in November of 2022 in an effort to rein in costs.
The only problem is that the severance package included paying the employees for 13 weeks after parting ways, along with a lump sum of one month's salary. I don't want to sound insensitive, but NO WONDER THEY'RE LOSING MONEY!
To make matters worse, I was absent-mindedly scanning the job postings in Sunday's San Francisco Chronicle last weekend and up pops DoorDash. The ad said they were looking for "Engineers, including but not limited to: Software, DevOps, Backend, Data. Positions include: Junior, Senior & Management Positions. Telecommuting permitted."
I wouldn't be too thrilled if I was one of the 1250 that were laid off. And it wouldn't help to see that the positions advertised would pay between $176,000 to $238,000. What is going on here?
It's all so foreign to me. Investors keep pumping in the money, unconcerned that the losses keep piling up. They keep seeing that light at the end of the tunnel, maybe years or decades ahead. They note that Apple, Google and Facebook all lost money in their early years. But Apple became profitable in two years, Google three years, and Facebook five years. DoorDash has been around for over 10 years.
In other words, if these companies keep running their business with no concern for costs, that light at the end of the tunnel, as they say, might very well be an oncoming freight train.

The other question, which is more personal and Bobpa does not have to answer is does he need an emergency fund? While I worked hard to wean my kids off my checkbook, and they happily followed thru when they had jobs, in a true financial emergency involving several thousands of dollars, we would gladly help.
It is important at young ages to adapt responsible budgeting, a savings plan and to be able to swing emergency car repairs for example, but a new roof might be beyond that funds capacity.
I would agree with paying off student loan.
Having received similar equity inheritances, I would also suggest keeping a little bit of at least one position as a sentimental reminder of someone else’s largesse.
I have a few shares of Exxon that “were” originally my grandfathers in 1920s. They are only electrons but they are still a reminder of his life and career.