A customer buys eggs in a Kroger grocery store on August 15, 2022 in Houston, Texas.
Brandon Bells | beautiful pictures
Consumer Price Index in July the report finally showed a potential sign of abating – inflation rose less than expected from a year ago and was flat for the month, meaning a basket of goods and services generally held steady. .
But some commodities have fallen on a monthly and weekly basis, potentially signaling that inflation has peaked and may cool.
This is welcome news for consumers who have been squeezed by higher prices and are looking for any sign of relief. Some of the top items at reduced prices include eggs, milk, and gasoline.
“Fuel inflation is really big and that’s going to have a pretty meaningful impact on consumers and their spending patterns,” said John Leer, chief economist at Morning Consult. “I think that’s actually a good thing for the economy.”
Many of the discounted items are related to food and energy, which are often the most volatile costs consumers have to deal with.
Dipped grocery store stapler. Big white egg the average cost was $2.14 for a dozen, for the week of August 15-21, according to the USDA. That’s a whopping 60% drop from last week, when the average was $2.74 per dozen.
The average price for a half gallon of milk fell to $1.95 from $2.05 between August 8-12 and the average price of butter fell to $3.67 from $4.68 la in the same timeframe, per USDA data.
Price of chicken breast is also decreasing weekly between 8th and 12th August, but other parts of the chicken are also falling – The price of chicken wings is trending down and now have lower costs than before the pandemic, according to data from the Department of Agriculture.
In addition to food, energy-related consumer goods and services could suffer.
This is because oil prices are often subject to large price fluctuations as the balance between supply and demand changes. This year, the war between Russia and Ukraine has thrown off balance and oil prices have skyrocketed as countries stopped buying from Russia, a major exporter.
However, oil prices have fallen again, reducing energy costs and especially gasoline. According to AAA, the national average for a gallon of regular gas was $3,918 on Friday. While this is higher than a year ago, it’s a sharp drop from the $4,495 consumers paid for gas a month ago and a sharp drop from the recent high of $5,016 reached. be in June.
That is also likely to affect another area of the economy that has seen a monthly drop in prices – airline tickets. According to travel website Hopper, the average price of a domestic flight ticket fell to $295 in August from $332 in July. This also coincides with the average price for domestic tickets in same month in 2019.
According to Kevin Gordon, senior director of investment research at Schwab, in addition to fuel costs, the drop in fares could be attributed to dwindling consumer demand.
“It could be demand destruction,” he said, adding that the reopening after pandemic shutdowns has raised the price of everything as consumers flock to vacation once again. Now, as the holiday season is falling, that demand has dropped.
Of course, a month of falling prices in some categories is not the trend.
A slowdown in price increases – and a drop in the cost of some goods and services – could mark the start of a decline, but more months of data are needed to know for sure.
“I think it’s too early to start winning,” Leer said, adding that consumers should expect to live in a world with high inflation within the next year and a half to two years.
Also, it’s important to remember that falling prices, or cooling inflation, could eventually signal that the US economy is slowing.
“You want the price pressure to ease, but the end goal of that is probably 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 leads to job losses.
Moreover, the prices of other common commodities remain high and continue to escalate. For instance, the prices of most fruits continue to stay high and even rise week after week, according to USDA data. Swift swings are also normal — although milk prices have fallen since August 12, milk and butter prices have rebounded through August 19, according to the USDA.
According to the Bureau of Labor Statistics, coffee prices rose 3.5% from June to July. Gordon noted that housing costs such as rent also remain high and are some of the hardest costs to reduce. best.
However, the fact that the prices of common items tend to decrease again is a good thing for psychology and consumers.
“I think consumers increasingly believe that inflation will fall,” Leer said.