American consumers have been (mostly) patiently waiting for prices to come down, and it’s finally beginning to happen.
After a years-long run up in prices that has caused many to restrict their spending, things are finally beginning to get cheaper.
A Washington Post report recently found:
- Ford recently marked down its electric Mustang Mach-E by 17 percent.
- Target is slashing prices on 5,000 items, including Persil laundry detergent by 5 percent, Clorox wipes by 14 percent and Purina One cat food by 17 percent.
- At Walgreens, swim goggles and Squishmallows are discounted by as much as 40 percent.
Those markdowns, and the consumer spending slowdown that prompted them, the Post noted, mark a turning point in the post-lockdown economy, after the sharpest surge in inflation in decades.
New inflation data on Wednesday offered yet another snapshot of just how much prices have cooled. Although the central bank held interest rates steady – as it has done since last summer – many are watching to see whether the Fed will begin cutting borrowing costs later this year or keep pressure on the economy in its fight against inflation, according to The Post.
“Retailers overreached when they started jacking up prices,” Mark Cohen, director of retail studies at Columbia Business School, told The Post. “Business has gotten stuck. Things are slowing down. Companies are waking up and realizing they have to start reducing prices.”
So far, according to The Post’s report, prices on things like groceries and general merchandise including toys, beauty products and household goods like toilet paper at some of the country’s largest retailers are coming down. The consumer price index from a month ago showed that a range of everyday items – including staples like bread, milk and poultry, all got cheaper between March and April, according to The Post.
“Americans across the country are making tough calls about where to spend their hard-earned money,” Joe Erlinger, president of McDonald’s USA, wrote in an open letter last month, according to The Post. “It’s clear that we – together with our franchisees – must remain laser-focused on value and affordability.”
Most of the announced price cuts are on goods — cars, furniture, appliances, sporting goods and dairy products — which had already gotten cheaper in the past year, according to federal inflation data.
The part of the economy where prices are still rising too fast is in services, like housing, health care and insurance. Those have been much harder to bring down, in part because they rely so heavily on workers, who have recently gotten pay raises. Overall, prices are 3.4 percent higher than they were a year ago, though some services are still notching double-digit growth. “It won’t affect inflation because inflation now is in housing, medical services and gas,” Sucharita Kodali, a retail analyst for Forrester, told the Post. “But it will impact perceptions of price when consumers shop in mass retail and that perception is what is most important.”
