From CNBC:

As inflation eases in the U.S. economy, some consumer categories are experiencing deflation. Prices have dropped for physical goods, not services. Economist Sarah House says the drop is due to a shift in demand and supply chain issues during the pandemic.

Prices for goods like toys, college textbooks, and televisions have declined since December 2022. Economist Mark Zandi attributes this to a shift in spending from goods to activities that were restricted during the pandemic. Used car and truck prices have also decreased.

The strong U.S. dollar relative to global currencies has helped decrease goods prices. The Nominal Broad U.S. Dollar Index is at its highest point since 2006. Meanwhile, falling energy prices have also contributed to lower transportation and manufacturing costs for goods.

Freight costs for shipping are expected to increase due to attacks on merchant ships in the Red Sea. This could lead to a reversal of goods deflation. Lower energy prices have also led to decreased food transportation costs, resulting in declining egg and lettuce prices.

The U.S. Bureau of Labor Statistics takes quality improvements into account when measuring inflation. This affects the data for electronics and health insurance. The decline in health insurance prices in 2023 reflects smaller insurer profits, not necessarily a decrease in consumer premiums.



Read more: Here’s where prices fell in December 2023, in one chart