US Treasury Secretary Janet Yellen expects inflation to decline in the second half of 2022.

US Treasury Secretary Janet Yellen said she expects inflation to decline in the second half of next year as more Americans return to work, consumer demand shifts to services, and supply chain problems subside.

“I expect annual inflation rates to drop to or near 2 percent,” Yellen said in an online statement Monday at an event hosted by the Greater Providence Chamber of Commerce. Yellen also noted that she expects monthly increases in the consumer price index to reach 0.2 percent, or around 0.3 percent, in the second half of 2022.

These are very low levels compared to October’s inflation of 0.9 percent monthly and 6.2 percent annually, the highest level since 1990.

Yellen added that the pandemic caused the high inflation and that she is confident that newly appointed Fed team Jerome Powell and Lael Brainard will not allow a return to 1970s-style inflation.

“I’m not Worried About a Return to 1970s Inflation.”

Yellen noted that while wages are rising at a record pace, especially for low-wage jobs, it is not a major cause of inflation and does not expect a wage-price cycle to enter.

The US Treasury Secretary pointed out that although millions of Americans are out of work because of childcare problems or retiring early, pressures will normalize as labor force participation increases.