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Here’s where prices fell in January 2024, in one chart


Customers shop at an RC Willey home furnishings store in Draper, Utah, Aug. 28, 2023.

George Frey/Bloomberg via Getty Images

Inflation has pulled back significantly from its pandemic-era peak. In fact, some categories have fallen into outright deflation, meaning consumers are seeing the prices decline instead of rise.

Deflation has largely occurred among physical goods rather than services, economists said. The former are tangible objects, while the latter are largely things we can experience, like haircuts and veterinary visits.

Demand for goods soared early in the Covid-19 pandemic, as consumers were confined to their homes and couldn’t spend on things such as travel or concerts. The health crisis also snarled global supply chains, meaning volume couldn’t keep pace with demand for those goods. Such supply-and-demand dynamics drove up prices.

Now, they’re falling back to earth.

So-called “core” goods inflation — which exclude food and energy prices, which can be volatile — was negative 0.3% in January 2024 relative to a year earlier, according to the latest consumer price index data issued Tuesday by the U.S. Bureau of Labor Statistics.

“Supply chains are going back to normal,” said Jay Bryson, chief economist for Wells Fargo Economics. “And on the demand side, there’s been somewhat of a rotation from goods spending back toward services spending.”

“We’re kind of reverting back to the pre-Covid era,” he added.

A shift away from spending on goods

Average prices have deflated for these physical goods, among others, from January 2023 to January 2024: furniture and bedding (prices have fallen by 2.9%); major household appliances (-7.3%); men’s suits, sport coats and outerwear (-5.3%); girls’ apparel (-9%); video and audio products (-5.8%); sporting goods (-1.1%); toys (-4.2%); and college textbooks (-5.7%), according to CPI data.

Prices for used cars and trucks have also deflated over the past year, by 3.5%, according to CPI data.

Used and new vehicle prices were among the first to surge when the U.S. economy reopened broadly early in 2021, amid a shortage of semiconductor chips essential for manufacturing.

These are the big deflationary factors

The Nominal Broad U.S. Dollar Index is higher than at any pre-pandemic point dating to at least 2006, according to U.S. Federal Reserve data. The index gauges the dollar’s appreciation relative to currencies of the U.S.′ main trading partners such as the euro, Canadian dollar, British pound, Mexican peso and Japanese yen.

Falling energy prices have also put downward pressure on goods prices, due to lower transportation and…



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