According to federal inflation data, goods such as cars, furniture, appliances, sporting goods, and dairy products have already become cheaper over the past year. Many retailers have announced price cuts on these items in an effort to attract customers and boost sales. However, the part of the economy where prices are still rising too fast is in services like housing, health care, and insurance. These prices have been more difficult to bring down due to their reliance on workers who have recently received pay raises. Overall, prices have increased by 3.4 percent compared to a year ago, with some services still experiencing double-digit growth.
Retail analyst Sucharita Kodali of Forrester suggests that these price cuts will not have a significant impact on inflation since inflation is currently highest in housing, medical services, and gas prices. However, these price cuts may affect consumers’ perceptions of prices when they shop in mass retail stores, which can be a crucial factor for retailers. Perception of price is often more important than actual price changes for consumers. This means that even if the actual cost of goods has gone down due to price cuts, if consumers feel that prices are still high or not affordable enough for them then it may lead to them shopping less or looking for alternatives elsewhere.
