By Robert Clampett
After more than a year of high inflation, consumers are finally starting to catch a break. Even gasoline, chicken wings, apartment rents and car prices are no longer spiraling out of control.
Reporting for the Washington Post, David Lynch writes “Global supply chains are finally operating normally, as more consumers spend more on in-person services like restaurant meals and less on goods like furniture and computers that come from an ocean away.
“The cost of sending a standard 40-foot container from China to the U.S. West Coast is $1,935 – down more than 90 percent from its September 2021 peak of $20,586, according to the online freight marketplace Freightos.”
In October, the Federal Reserve’s consumer price index is now rising at an annual rate of 7.7 percent, down from 9.1 percent last June.
“The worst of the inflation is behind us,” said Steven Blitz, chief U.S. economist for TS Lombard in New York. “The question is where does inflation settle?”
Fed Chair Jerome H. Powell noted signs of progress, but said it was too early to claim victory. “It will take substantially more evidence to give comfort that inflation is actually declining. By any standard, inflation remains much too high,” Powell told an audience at the Brookings Institution.
Still, there are clear signs of improvement in merchandise prices, as consumers resume their pre-pandemic spending patterns. Excluding volatile food and energy prices, goods prices rose in October by 5.1 percent, down from a 12.3 percent annual rate in February.
Most of what is happening now with prices reflects developments in specific markets or consumers’ return to pre-pandemic routines. The plunge in ocean shipping costs, by itself, has stripped roughly 0.7 percentage points from the inflation rate, according to Zvi Schreiber, CEO of Freightos.
With Europe and the United Kingdom in recession and China hobbled by its restrictive zero-Covid policy, global demand for oil has sagged. A barrel of Brent crude now goes for about $85, one-third less than in early March following Russia’s invasion of Ukraine. As a result, the national average price for a gallon of regular gasoline is $3.47, down almost 8 percent from one month ago, according to AAA.
Many retailers find themselves with unusually high inventories, the result of two years of stymied supply chains. But as shipping and raw material costs declined, companies such as Ikea recently began reducing selected prices. Tolga Oncu, retail operations manager for Ingka Group, Ikea’s corporate parent, told Reuters this week he was “quite optimistic” about being able to lower additional prices in the months ahead.