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Inflation has gradually eased across the US economy, and some areas of consumer spending, such as furniture and gasoline, have even contracted over the past year.

Deflation occurs when the prices of goods and services fall.

Economists said it is rare for prices to fall below their current levels across the economy in general.

However, the prices of many physical goods have fallen as supply and demand dynamics return to normal after pandemic-era distortions.

“Except for commodity prices, I don't think we'll see rate cuts,” said Mark Zandi, Moody's chief economist.

“(Companies) will maintain the price if demand is weak but outright price declines are very rare, and even in a recession it is not common,” Zandi said.

Additionally, energy and food commodity prices can be volatile, so it is not unusual to see up and down fluctuations. The quality of consumer electronics is also constantly improving, a dynamic that statisticians equate with shrinkage but that may only be evident on paper and not in the store.

Average prices of “core” goods — goods that exclude food and energy — have fallen about 1% since September 2023, according to the Consumer Price Index.

Demand for physical goods surged in the early days of the COVID-19 pandemic. Consumers were confined to their homes and unable to spend on things like concerts, travel, or dining out. Households also gained more discretionary income, cut back on spending and received more money from federal aid.

The pandemic also disrupted global supply chains, meaning goods did not reach shelves as quickly as consumers wanted.

These supply and demand dynamics led to higher prices.

Economists said those distortions have now largely eased and prices have fallen as a result.

For example, home furnishings prices have fallen about 2% over the past 12 months, as have prices for appliances (down 3%), tools and appliances (4%), women's outerwear (6%), and sporting goods (2%). According to consumer price index data.

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Vehicles were also “one of the main areas of commodity deflation,” said Sarah House, chief economist at Wells Fargo Economics.

New and used car prices have decreased by 1% and 5%, respectively, since September 2023.

House said it's normal to see some “rollback” in prices because cars saw the biggest increases when inflation started to rise in 2021. In June 2021, for example, used car prices rose 45% from the previous year.

The US Federal Reserve also raised interest rates aggressively to combat high inflation, which led to higher financing costs for car buyers. Economists said that weakened demand, which also led to lower prices. The Fed began its interest rate cutting cycle in September.

Beyond supply and demand dynamics, the strength of the US dollar compared to other global currencies has also helped curb the prices of imported goods, economists say. This makes importing goods from abroad less expensive for American companies, as the dollar can buy more.

Except for imported goods, consumers may also see a “return” in food and energy prices, Zandi said. He added that it is affected by “large fluctuations in commodity prices, currency values, and trade relations.”

For example, prices for regular unleaded gasoline have fallen about 16% since September 2023, according to CPI data.

Food prices generally also depend on their own unique supply and demand dynamics. Categories such as apples, potatoes, frozen vegetables, fresh fish and seafood saw price declines of about 11%, 4%, 2% and 1%, respectively.

The quality of consumer electronics such as televisions, cell phones, and computers is also constantly improving, which means that consumers are generally getting more for the same amount of money. The US Bureau of Labor Statistics, which compiles the monthly CPI report, equates that to falling prices in inflation data.