According to CBS News, prices for some things are going down after being very high for more than two years. David Harrison, a writer for the Wall Street Journal, says that deflation is having an effect on durable goods because prices have been going down year-over-year for five months in a row and are expected to drop another 2.6% in October from their peak in September 2022. Things like used cars, furniture, and tools had their prices go up a lot during the pandemic, but now they’re going down. The recent trend of going down in these places could help bring inflation in the U.S. closer to the 2% goal set by the Federal Reserve. Since the beginning of 2022, the Federal Reserve has raised its base rate eleven times. This has made it more expensive for people and companies to borrow money. Since inflation is going down, many experts think that the Fed will wait to raise rates again. The next meeting of the Federal Reserve is set for December 13. David Harrison thinks that the drop in prices of durable goods is a good sign because it will balance out the rise in prices of services and could bring inflation back to the target level of 2%.
Deflation in U.S. (PHOTO: CBS News)
Deflation happens when people don’t want to buy as many goods and services. This usually happens during a slump, which is bad for the business. Harrison said that deflation could hurt many businesses because people might wait to buy things because they think prices will go down even more. There are worries about the future of the economy as a whole, even though the inflation rate is still above the Federal Reserve’s 2% goal. Economists study trends, but how people feel about things is affected by exact prices. Many Americans are still feeling the effects of rising prices, especially at the food store. Even though inflation has gone down, Americans are still cautious about the economy. About 60% of workers say that price rises are because of their pay. The inflation rate for November will be released on December 12, which will give us more information about the economy.
