[ad_1]
Inflation in the broader U.S. economy has been gradually decreasing, with certain areas such as furniture and gasoline even experiencing deflation over the past year. Deflation occurs when prices for goods and services decline, a rare occurrence across the economy as a whole. However, prices for many physical goods have deflated as supply and demand dynamics return to normal post-pandemic disruptions.

According to economists like Mark Zandi from Moody’s, price cuts outside of goods prices are unlikely, with outright price declines being uncommon even during recessions. Energy and food commodity prices can be volatile, while consumer electronics continually improve in quality, leading to a deflationary effect on paper.

The consumer price index shows that average prices for “core” goods, excluding food and energy, have deflated by about 1% since September 2023. The surge in demand for physical goods during the early days of the pandemic, coupled with disrupted global supply chains, initially drove prices up. However, as supply and demand dynamics have normalized, prices have since declined.

Price decreases have been observed in household furnishings, appliances, tools, women’s outerwear, sporting goods, and even vehicles. The Federal Reserve’s aggressive interest rate hikes to combat Inflation contributed to pricier financing costs for car buyers, weakening demand and pushing prices down.

Factors such as the U.S. dollar’s strength relative to other currencies and normalization of prices in food and energy have also played a role in curbing Inflation. Consumer electronics like televisions, cellphones, and computers continue to improve in quality, providing consumers with more value for their money.

Overall, the gradual decrease in Inflation and instances of deflation in certain consumer goods signify a return to normalcy in supply and demand dynamics post-pandemic disruptions.

[ad_2]
Inflation-cpi-september-2024-in-one-chart.html”>SOURCE