Despite the prevailing inflation, certain everyday items experienced a decrease in cost this year.
Although the carton of eggs would argue differently, the costs of everyday items and services increased by 2.5% from January to November this year, as shown by the Bureau of Labor Statistics. However, this is less than the 3.1% increase in 2023 and the 6.4% increase in both 2022 and 2021 for the same period.
Even though prices aren't rising as rapidly as they have in recent years and wages are increasing faster than inflation, it doesn't bring the same level of comfort to household budgets or bank accounts. The relentless impact of the once-in-a-generation inflation has taken its toll.
Despite the tough times, it's worth acknowledging some price-related victories of the past year, understanding their causes, and looking ahead to what's to come in the upcoming year.
Here's a brief overview of some major categories that have seen a decrease in prices this year, as per Consumer Price Index data through November:
Home heating oil (fuel oil)
The price change for 2024 (through November): a decrease of 16.8%
In the face of escalating energy costs, positive developments are hard to come by. But in 2024, lower crude prices led to a significant drop in residential heating oil prices heading into the winter season.
With a nearly 17% reduction in price compared to the previous year, many Northeasterners, Alaskans, and other home heating oil users comprising 4% of the US population should find this a welcome relief. However, it's not a straightforward situation.
First, this decrease in price stems from a reduction off an all-time high in November 2022 (based on data from the US Energy Information Administration), and these prices have climbed by 27% since before the pandemic, according to CPI data.
Second, the ultimate cost borne by consumers is affected by factors such as weather, usage, and energy efficiency. As a result, heating oil expenditures are expected to drop by only 2.7% during the winter season, according to the National Energy Assistance Directors Association's latest forecast. Conversely, consumers using propane or electricity for heating may see costs rise by 4.4% and 14.2%, respectively.
Gasoline
The price change for 2024 (through November): a decrease of 7.6% (all types of gasoline)
Gas prices may be unpredictable and have a significant impact on both personal and commercial activities, but they serve as a highly noticeable indicator of price trends.
Gasoline prices experienced a reprieve for consumers in 2024, despite persistent Middle East tensions and the ongoing conflict between Russia and Ukraine. While US oil prices hover around $70 per barrel, this is far fewer than the $120 per barrel spike in 2022 following Russia's invasion of Ukraine.
Lower demand worldwide, particularly in China, has helped curb crude prices while supply remains strong. One primary reason for this is the US' increased oil output, which exceeds that of any other nation in history.
Experts from GasBuddy believe that gas prices will continue to fall in 2025. According to them, the national average could decrease to $3.22 in 2025, from the current $3.33, as predicted by GasBuddy.
However, gas prices can be as volatile as gasoline itself, and geopolitical risks remain high, said Lauren Saidel-Baker, an economist at ITR Economics. "There are these non-fundamental economic factors that could potentially impact [gas prices] moving forward," she stated.
Consumer technology
The price change for 2024 (through November): a decrease of 6.7%
Historically, technology has been a deflationary product, noted Rick Kowalski, senior director of business intelligence at the Consumer Technology Association. Several factors contribute to this, such as increasing efficiency through Moore's Law, growing economies of scale, and the highly competitive nature of the technology industry.
As a result, even during periods of rampant inflation across the economy, the prices of many consumer tech products have remained below main inflation rates, Kowalski noted.
While the information technology commodities index of CPI has dropped by more than 26% from February 2020, according to BLS data.
Could this trend change in 2025? While the tendency for tech device price changes to run below core inflation should persist, there's a significant wild card on the horizon - tariffs that have been threatened by the incoming President-elect, Donald Trump.
"Tariffs would increase the prices for a lot of products," Kowalski said. "Tariffs are a tax on consumers and businesses, they disturb supply chains, they reduce global innovation, and they inhibit investment."
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Recent research revealed that potential tariffs might elevate the costs for frequently bought tech items. If these tariffs were completely passed on to consumers, the typical price of a TV could increase by 9%, or $48; smartphones by 25.8%, or $213; and laptops by a substantial 45%, or $357, as per the report from the research body.
Used and rental vehicles
Projected changes up to November 2024: Rental car prices decreased by 6.7%; used car prices dropped by 4.6%
The pandemic disrupted supply chains, causing prices to rise for various products. However, the auto industry experienced significant price surges due to factors such as:
A worldwide shortage of computer chips severely hindered the production of new vehicles, leading to a considerable increase in demand and prices for used cars (approximately 45% at its peak, according to CPI data). Once supply chains recovered, these prices began to decrease throughout 2023 and persisted into 2024.
These decreases were even more marked in the rental market, which experienced a nearly 110% annual inflation rate spike in May 2021.
2025 forecast: Used car prices are not decreasing at the same pace, but the overall vehicle price outlook remains uncertain. Despite high interest rates acting as a significant barrier to purchase, they have also kept a lid on price surges, according to Gus Faucher, chief economist at PNC Financial Services Group.
"That's how inflation slows," Faucher said.
However, tariffs could alter the landscape of the US auto industry, economists argue.
The high number of components in cars manufactured in the US would be challenging for domestic suppliers to replace, making it considerably more costly to build cars at US auto plants.
Consumer goods (apparel, toys)
2024 price decreases: Men's suits fell by 5.2%; women's dresses and outerwear decreased by 3.7%; toys dropped by 3.1%
The 2024 inflation narrative has largely been driven by services-related expenses, such as housing, rent, education, and healthcare.
Goods prices, however, continued to decline from their pandemic peaks. Some of the categories experiencing the most substantial decreases were clothing, toys, and even some furniture and items like sewing machines.
"We were cooped up at home, so we purchased a lot of products online – physical goods," Faucher noted, highlighting the 15% surge in goods purchases during this period.
The supply chain was not well-equipped to handle this increased demand, leading to higher prices. Demand has since stabilized – people eagerly ventured out again; supply chains improved; and it is challenging to purchase endless sewing machines, sofas, and exercise equipment – which resulted in either minimal price hikes or even decreases.
Will this trend continue? Assuming no external factors, goods prices should remain fairly stable heading into 2025; however, (reiterating a familiar note), this could change if tariffs were imposed on key trade partners, Faucher pointed out.
"A lot of the goods we buy are imported, and even for goods produced domestically, they rely on foreign inputs," Faucher said. "If we levy tariffs, this would drive up goods prices, at least temporarily. And that would lead to higher goods inflation, and overall inflation."
Food
2024 price decreases (up to November): Frozen baked goods decreased by 3.3%; crackers decreased by 2.4%; canned vegetables declined by 2.2%
Despite what your morning omelette might argue, food prices have generally remained stable in 2024, with a few categories even recording price drops.
These include frozen foods, canned foods, and packaged items like crackers and cereal.
Some of these declines can be attributed to shifts in demand (people going out more or eating less processed food) and factors such as weather and harvests.
However, they can also be a reflection of the inherent volatility of the food industry, which has always been susceptible to price fluctuations due to weather events, crop yields, disease, wars, supply chain disruptions, surges in demand, or temporary issues.
And that's playing out with the sharpest price increases in recent months in products like eggs, meat, coffee, orange juice, and dairy.
So, in relation to 2025: Overall food prices are expected to continue to see disinflation, according to the US Department of Agriculture's Economic Research Service projections.
However, certain food industry sectors currently grappling with shortages due to diseases or weather could continue to see higher prices, economists have told CNN. They also stress that food price volatility may intensify as weather events become more severe and geopolitical tensions worsen.
(Once more for good measure...) Food prices could be negatively impacted by policies like tariffs, mass deportations, or restrictions on immigration.
Despite the lower prices in some categories, such as home heating oil and gasoline, the overall cost of living continues to present challenges for many households. The business world is closely monitoring these trends, as they can significantly impact consumer spending and economic growth.
Moreover, potential tariffs could affect the prices of frequently bought tech items, leading to increased costs for televisions, smartphones, and laptops. Therefore, it's crucial for businesses to stay informed about these changes in the economy and adjust their strategies accordingly.
