Who wouldn’t like prices to start falling? Careful what you wish for, economists say

WASHINGTON (AP) — Many Americans are in a sour mood about the economy for one main reason: Prices feel too high.

Maybe they’re not rising as fast as they had been, but average prices are still painfully above where they were three years ago. And they’re mostly heading higher still.

Consider a 2-liter bottle of soda: In February 2021, before inflation began heating up, it cost an average of $1.67 in supermarkets across America. Three years later? That bottle is going for $2.25 — a 35% increase.

Or egg prices. They soared in 2022, then fell back down. Yet they’re still 43% higher than they were three years ago.

Likewise, the average used-car price: It rocketed from roughly $23,000 in February 2021 to $31,000 in April 2022. By last month, the average was down to $26,752. But that’s still up 16% from February 2021.

Wouldn’t it be great if prices actually fell — what economists call deflation? Who wouldn’t want to fire up a time machine and return to the days before the economy rocketed out of the pandemic recession and sent prices soaring?

At least prices are now rising more slowly — what’s called disinflation. On Friday, for example, the government said a key price gauge rose 0.3% in February, down from a 0.4% gain in January. And compared with a year earlier, prices were up 2.5%, way down from a peak of 7.1% in mid-2022.

But those incremental improvements are hardly enough to please the public, whose discontent over prices poses a risk to President Joe Biden’s re-election bid.

“Most Americans are not just looking for disinflation,’’ Lisa Cook, a member of the Federal Reserve’s Board of Governors, said last year. “They’re looking for deflation. They want these prices to be back where they were before the pandemic.’’

Many economists caution, though, that consumers should be careful what they wish for. Falling prices across the economy would actually be an unhealthy sign.

Panorama Hispano is the regional news and information newspaper for Hispanic and other diverse communities.

US Hispanics are now the largest ethnic minority in the United States numbering 54.2 million as of July 2014. Serving: Buffalo, Rochester, Fredonia, Niagara Falls, NY and Erie, PA. Outside our Market area: Visit our affiliate at: http://www.impremedia.com/

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