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Inflation is higher than policymakers would like across the broad U.S. economy. Yet, there are many sectors seeing the opposite dynamic: deflation.
Deflation means prices are declining for consumers. Conversely, inflation measures how quickly costs are rising for goods and services.
Consumers have largely seen prices deflate for physical goods, such as cars, furniture and appliances, economists said. They’ve also declined for some groceries and other things, such as travel, according to the consumer price index.
Why home goods prices have decreased
Demand for physical goods soared in the early days of the Covid-19 pandemic as consumers were confined to their homes and couldn’t spend on things such as concerts, travel or dining out.
The health crisis also snarled global supply chains, meaning goods weren’t hitting the shelves as quickly as consumers wanted them.
Such supply-and-demand dynamics drove up prices.
Now, however, they’ve fallen back to earth. The initial pandemic-era craze of consumers fixing up their homes and upgrading their home offices has diminished, cooling prices. Supply-chain issues have also largely unwound, economists said.
Prices on goods have been in “modest deflationary territory for a while now,” said Michael Pugliese, a senior economist at Wells Fargo Economics.
Physical goods prices have deflated in all but one month since May 2023, for example. Prices are down 1.3% in the past year, according to CPI data.
Perhaps the most prominent examples are items sold in retail stores, such as home furniture, said Stephen Brown, deputy chief North America economist at Capital Economics.
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Furniture and bedding prices fell 3.8% in the past year, and 0.5% just in the month from March to April, according to CPI data.
Meanwhile, prices for home appliances, such as laundry equipment, declined by 5.6% in the past year.
Additionally, they’ve decreased for goods such as dishes and flatware, down 6.5%; toys, down 7.4%; outdoor equipment and supplies, down 6.1%, and sporting goods, down 1.1%.
The U.S. dollar’s strength relative to other global currencies has also helped rein in prices for goods, economists said. This makes it less expensive for U.S. companies to import goods from overseas, since the dollar can buy more.
The Nominal Broad U.S. Dollar Index…
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