Inflation, which hit a high of 9% two years ago, is finally slowing down. This is a relief for many families and has had a positive effect on President Biden’s approval rating.
Inflation Rates Are Dropping
In June, the inflation rate fell to 3%, down from 3.3% in May. This is the first month-to-month decrease in overall prices since 2020. While some areas still see high prices, inflation seems to be heading toward the Federal Reserve’s 2% target. Many people still feel the sting of high prices from the past two years, but there is good news: some prices are actually dropping, and this trend is likely to continue. Here are five positive changes for consumers.
1. Goods Are Getting Cheaper
Prices for goods are dropping. Overall, goods are cheaper now than they were last year. For example, furniture prices are down 4.6%, appliances are down 3.6%, and electronics are down 1.6%.
Food prices are still going up, but only by 2.2% compared to 11% in 2022. Retailers are lowering some food prices as people buy less, which is how supply and demand should work.
2. Rent Inflation Is Improving
Rent prices are still rising, but at a slower rate. The annual rent inflation rate is 5.1%, down from 8.8% last year. Economists believe rent prices will continue to go down. The government’s rent inflation data doesn’t always show real savings from new leases, but other data indicates that rents on new leases have dropped over the past year.
3. Car Prices Are Dropping
New car prices have fallen for five months in a row and are down 0.9% from last year. Used car prices have also dropped, by 10.1% from last year. Although car prices are still above pre-COVID levels, they could drop further if demand decreases and dealerships end up with too much inventory.
4. Car Insurance Costs Are Stabilizing
Car insurance premiums have been rising along with car prices, but this trend is slowing down. While insurance costs are up 19.5% from last year, the price increases this year are smaller. Some drivers might still see higher premiums when they renew their policies, as prices only reset every six to twelve months.
5. Consumers Are Less Worried About Inflation
Shoppers are noticing fewer price changes in their usual purchases, which aligns with decreasing inflation and growing confidence. Expectations for future inflation have dropped significantly, nearing pre-COVID levels. This is crucial for maintaining a positive economic outlook.
Although some services still have high inflation rates, particularly in housing and car insurance, the overall trend is improving. Soon, Americans might have to find something else to worry about as inflation concerns fade.