A customer shops for eggs at a Kroger supermarket on August 15, 2022 in Houston, Texas.
Brandon Bell | fake images
july consumer price index The report finally showed a sign of possible relief: Inflation rose less than expected from a year ago and remained flat in the month, meaning a basket of goods and services generally remained at the same price.
But some items have fallen, monthly and weekly, which could indicate that inflation has passed its peak and may be cooling off.
This is good news for consumers who have been pressured by higher prices and are looking for any sign of relief. Some of the main items whose prices have fallen are eggs, milk and gasoline.
“Fuel inflation was really big and that’s going to have a pretty significant impact on consumers and their spending patterns,” said John Leer, chief economist at Morning Consult. “I think it’s actually a good thing for the economy.”
Many of the items that have declined are linked to food and energy, often the most volatile costs facing consumers.
Grocery store staples have tanked. large white eggs they cost, on average, $2.14 per dozen, during the week of August 15-21, according to the USDA. That’s a whopping 60 cents drop from the previous week, when the average was $2.74 per dozen.
The average price of a gallon of milk fell to $3.16 from $3.24 during the period from August 8 to 12 of the previous month, and the average price of butter fell to $3.67 from $4.68 in the same period. . according to USDA data.
chicken breast prices it also slipped weekly during the period from August 8 to 12, but other parts of the chicken are also declining: chicken wing prices have been on a downward trend and now cost less than before the pandemic, according to data from the Department of Agriculture.
Outside of food, declines can be seen in consumer goods and energy-related services.
This is because oil prices are often subject to large price swings as the balance between supply and demand shifts. This year, the war between Russia and Ukraine upset that balance and the price of oil soared as countries stopped buying from Russia, a major exporter.
However, oil prices have fallen again, lowering the cost of energy and particularly gasoline. The national average for a gallon of regular gas is $3,918 as of Friday, according to AAA. While that’s higher than it was a year ago, it’s a solid decline from the $4,495 consumers were paying for gas a month ago, and a sharp drop from the recent high of $5,016 hit in June.
That also potentially affected another area of the economy that saw prices fall month-over-month: airfares. The average price of a domestic plane ticket has dropped to $295 in August from $332 in July, according to travel site Hopper. That is also back in line with the average price of a domestic ticket in the same month in 2019.
Outside of fuel costs, this drop in ticket prices could be because consumer demand is fading, according to Kevin Gordon, senior manager of investment research at Schwab.
“That could be demand destruction,” he said, adding that the reopening of pandemic lockdowns inflated the price of things as consumers rushed to vacation again. Now that the holiday season is coming to an end, that demand is down.
Of course, a month of falling prices in some categories is not a trend.
Slowing price increases, and falls in the costs of some items and services, may mark the beginning of declines, but more months of data would be needed to be sure.
“I think it’s too early to start a victory lap,” Leer said, adding that consumers should expect to live in a world with high inflation for the next year and a half to two years.
Additionally, it is important to remember that falling prices or cooling inflation may ultimately indicate that the US economy is slowing.
“You want to ease price pressures, but the bottom line of that is probably that we’re getting closer to a recession,” Gordon said. As the Federal Reserve continues to raise its benchmark interest rate, it wants the economy to slow down, but will try not to push the US into a recession that would cause job losses.
In addition, the prices of other common items have remained stubbornly high and continue to rise. The price of most fruits, for example, remains high and is even increasing week over week, according to USDA data. Rapid swings are also normal: Although dairy products fell through Aug. 12, milk and butter prices rose again through Aug. 19, the USDA found.
Coffee prices rose 3.5% from June to July, according to the Bureau of Labor Statistics. Housing costs, like rent, have also remained high and are some of the hardest to bring down, Gordon said.
Still, seeing prices for common items drop again is a good thing for consumers and sentiment.
“I think consumers increasingly believe that inflation is going to come down,” Leer said.