American shoppers, burned by more than two years of rapid inflation, are getting some welcome relief this holiday season: Prices on many products are falling.
Toys are almost 3% cheaper this Christmas than last, government data shows. Sports equipment is down nearly 2%. Bigger-ticket items are also showing price declines: Washing machines cost 12% less than a year ago, for example. And eggs, whose meteoric rise in prices last winter became a prime example of the country’s inflation problem, are down 22% over the past year.
Consumer prices, in the aggregate, are still rising, although not nearly as quickly as a year ago. Most groceries still cost more than they did a year ago. So do most services, such as restaurant meals, haircuts and trips to the dentist. And housing costs, the biggest monthly expense for most Americans, are still rising for both renters and homebuyers. Overall, the price of physical goods is flat over the past year, while the price of services is up a bit more than 5%.
Still, economists view the moderation in goods prices as an important step toward putting the high inflation of the past 2 1/2 years more firmly in the rearview mirror. They expect it to continue: Most forecasters say prices for physical products will keep falling next year, especially prices for longer-lasting manufactured goods, where the recent declines have been largest. That should help price increases overall to ease.
“We’re just kind of in the beginning of that phase, and we should continue to see downward pressure on prices in this category,” said Michelle Meyer, chief economist for Mastercard.