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Friday, April 28, 2023

The Daily Money: When will prices for goods go down?

As inflation cools, some companies say they will stop or slow the rate of price increases.
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The Daily Money

ALL THE MONEY NEWS YOU NEED TO KNOW

Fri Apr 28 2023
 

We made it to Friday, Daily Money readers! It's Amanda Pérez Pintado with today's top headlines.

Consumers have, so far, continued spending despite price hikes. But there's good news for shoppers.

As inflation cools and consumers push back against higher prices, some companies say they will stop or slow the rate of price increases . Coca-Cola, for instance, expects to slow price increases this year, and Chipotle plans to pause price hikes. 

And more companies could follow suit, according to Matt Kramer, national sector leader of consumer and retail for KPMG.

Key inflation measure eases in March

An inflation measure watched closely by the Federal Reserve cooled last month. 

Consumer prices increased 4.2% in March from a year earlier, down from 5.1% in February, according to the Commerce Department. 

A  measure of prices that excludes volatile food and energy items ticked up 0.3%, in line with the rise the previous month.

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About The Daily Money 

Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.
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The hopes that inflation might soon moderate were dashed when the consumer price index for April rose 8.3% compared to last year. The producer price index for April confirmed this further. It rose 11% compared to the same month last year. The PPI measures input costs, or wholesale prices, from the point of view of producers. The prices of a very few items in the CPI have actually fallen over the past several months. At the top of this list - the price of food service at schools is plunging (down 43% in April compared with last year), as did the price of food service at businesses (down 30%). In each case, the fact that so many Americans work or attend school from home is likely the cause. The American consumer is caught in a vice. To a large extent, inflation has been caused by upward pressure on oil prices due to the Russian invasion of Ukraine. The war also affects wheat supplies. COVID-19 infections, which have raced through China's two largest cities and shuttered factories, have exacerbated global supply chain problems. ( These are the metros where families pay the least for food .) The Federal Reserve has been called upon, for decades, to help steer the economy between inflation and recession. The Fed does so by setting interest rates and buying bonds. Recently, it has been credited with helping drag the U.S. out of The Great Recession and the COVID-19-driven economic downturn. To accomplish these things, the Fed has kept interest rates near historic lows. This, in turn, has helped consumers with major purchases like homes. The need for Fed action has changed course, almost overnight, however. Rampant inflation has forced the Fed to raise rates, and it may further raise rates by as much as half a percentage four or five times this year. There is even talk about the possibility of a 0.75 point bump. And if rates are raised too aggressively, the economy could fall into a recession. ( This is the city with the cheapest groceries in every state .) To determine the consumer activity that is plunging in price, 24/7 Wall St. reviewed data on the consumer price index for all urban consumers from the Bureau of Labor Statistics.
 

Lower food and energy prices slow inflation in March

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Amid rising prices for goods, consumers ask: When will it stop?

As inflation begins to plateau, some companies say they will stop or slow the rate of price increases.
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