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

cnbc.com:

As inflation continues to throttle back across the broad U.S. economy, some consumer categories have sunk into outright deflation.

In other words: Americans are seeing prices decline for certain items.

Those pullbacks have largely been among physical goods rather than services, economists said.

Demand for goods soared early in the Covid-19 pandemic, as consumers were confined to their homes. The health crisis also snarled global supply chains for those goods. These dynamics drove up prices. Now, they're falling back to earth.

«You have seen some [price] give-back in some categories that were most affected by the shift in consumer demand, as well as being affected most severely by some of the supply-chain issues we saw over the course of the pandemic,» according to Sarah House, senior economist at Wells Fargo Economics.

For example, average prices have declined in these categories, among others, since December 2022: toys (by 4.5%), college textbooks (4.9%), televisions (10.3%), men's suits, sport coats, and outerwear (6%), sporting goods (2.5%), furniture and bedding (4.3%), and computer software and accessories (9.9%), according to the consumer price index.

«We bought a lot of goods because we couldn't go out, travel, go to ballgames» early in the pandemic, said Mark Zandi, chief economist at Moody's Analytics. «There has been a shift from goods to things we couldn't do when we were shut in.»

Prices for used cars and trucks have also fallen, by 1.3%, according to CPI data.

Used and new vehicle prices were among the first to surge when the U.S. economy reopened broadly early in 2021, amid a shortage of semiconductor chips essential for manufacturing.

However, price levels on used cars remain more than 30% higher than they