ICYMI: 'From chicken wings to used cars, inflation begins to ease its grip'

There are initial signs that we are making progress in tackling inflation—with prices falling for goods like furniture and used cars—bringing welcome relief for American families.

As the Washington Post put it yesterday, "The price of gasoline is dropping like a rock. Chicken wings are suddenly a bargain. And retailers drowning in excess inventory are looking to make a deal. After more than a year of high inflation, many consumers are finally starting to catch a break."

Read more below:

Washington Post: From chicken wings to used cars, inflation begins to ease its grip
[David J. Lynch, 12/4/22]

The price of gasoline is dropping like a rock. Chicken wings are suddenly a bargain. And retailers drowning in excess inventory are looking to make a deal.

After more than a year of high inflation, many consumers are finally starting to catch a break. Even apartment rents and car prices, two items that hammered millions of household budgets this year, are no longer spiraling out of control.

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.

The moderation in inflation is just beginning to appear in government statistics. In October, the Federal Reserve's preferred price gauge, the personal consumption expenditures index, posted its smallest monthly increase since September of last year, and is up 6 percent over the past 12 months. The better-known consumer price index is rising at an annual rate of 7.7 percent, down from 9.1 percent in June.

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Many retailers find themselves with unusually high inventories, the result of two years of herky-jerky 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.

The company did not reply to a request for comment.

Walmart also said last month that it will be looking for opportunities to cut prices. Sam's Club, the company's warehouse membership store, recently cut the price of its in-house hot dog and soda combo to $1.38 from $1.50, undercutting rival Costco.

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After soaring in 2021, wholesale used car prices are down 15 percent from January, according to Manheim, an Atlanta-based automobile auction company. And those declines are starting to show up in prices paid by consumers, said Jonathan Smoke, chief economist for Cox Automotive.

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Apartment rents, meanwhile, after moving steadily higher all year, are finally cooling. The national average rent for a two-bedroom apartment is up 8.1 percent from one year ago, down from April's 14.6 percent rate, according to Zumper, an online rental marketplace.

The change has been especially striking in cities such as Boise, Phoenix and Austin, which benefited as employees moved to take advantage of the work-from-home era.

"Rental prices are cooling off and cooling off faster than anyone ever expected," said Zumer chief executive Anthemos Georgiades. "'23 is going to be a far more affordable year for renters."

Real-time rental data takes months to show up in government statistics, Powell said in his Brookings speech. But it will start contributing to lower inflation readings next year, which explains why most forecasters expect a steady decline in inflation.

The Fed expects its preferred inflation gauge, the PCE index, to hit 2.8 percent by the end of next year, down from 6 percent today.