As inflation continues to slow, some items like furniture and used cars are leading the pack with price drops.
On an annual basis, prices of goods and services are rising at a rate of 2.9%, government data released Wednesday shows. Although still higher than the ideal rate of 2%, the latest consumer price index (CPI) was better than many economists expected, and it marks the first time in more than three years that inflation has dipped below 3%.
The CPI measures how prices in the economy are changing for everything we buy, from homes and cars to books and toys. Some categories in the index fluctuate up and down all the time, like food and energy items.
Beyond the usual price volatility, July’s report showed a host of items that are getting cheaper even though they don’t go down in price often. That includes big-ticket items that often require financing like used cars and home appliances, which have seen lower demand amid high interest rates.
Consumers are also reportedly getting more selective about their spending, which could be taking pressure off prices for discretionary spending categories. Several major companies including McDonald’s, Starbucks and (most recently) Home Depot, have told their investors they’re seeing more “weakness from the consumer.”
As a result, after years of stubbornly high inflation and interest rates, prices are now falling for several items. Here are six things getting cheaper as inflation cools:
Used cars
Bank of America said in a Wednesday report that the used cars category of the CPI is one of the “main drivers” of falling goods prices. Used car prices have sunk in the past year amid high auto loan rates, and the CPI showed a 2.3% drop in this sector from June to July.
According to a separate report out Wednesday from Edmunds, average used car prices were $27,472 in the second quarter of 2024, down from $29,742 a year earlier.
Apparel
The Bureau of Labor Statistics highlighted falling clothes prices in a news release. Overall, prices were down 0.4% for the month. Apparel categories like men’s suits (-4.2%) and women’s outerwear (-1.1%) had larger monthly price drops.
Airline fares
As the summer travel season comes to a close, it’s getting a little easier to find reasonable airfare, as prices fell 1.6% month-over-month. The decrease isn’t driven by seasonal trends, either. “On a yearly basis, airline fares, after rising steeply in 2022, have fallen for 16 months in a row and are below their pre-pandemic price level,” the White House Council of Economic Advisers said in a tweet Wednesday.
Furniture
Furniture prices fell 1% from June to July and are down a whopping 5.9% over a year. Consumers sometimes use financing to afford major furniture purchases, and this price drop could be an example of the Federal Reserve’s high interest rates taking a toll on an industry.
Some food items
Food prices remain persistently high, as Americans are reminded of every time they go to the store. Prices for grocery items surged especially in 2022, and some staples, like eggs and beef, are still rising much faster than the total rate of inflation. Overall, though, food prices seem to be moderating, as the CPI indicates that they’ve only gone up 1.1% in the past year.
More good news? Prices for several food items actually dropped in July, including apples (-1.2%), fresh seafood (-2.4%) and ice cream (-2.1%).
Televisions
If you’re in the market for a new big screen, you might be able to find a deal: TV prices are down 1.1% from June and 5.4% from a year ago.
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