Inflation has pulled back significantly from its pandemic-era peak. In fact, some categories have fallen into outright deflation, meaning consumers are seeing the prices decline instead of rise.
Deflation has largely occurred among physical goods rather than services, economists said. The former are tangible objects, while the latter are largely things we can experience, like haircuts and veterinary visits.
Demand for goods soared early in the Covid-19 pandemic, as consumers were confined to their homes and couldn’t spend on things such as travel or concerts. The health crisis also snarled global supply chains, meaning volume couldn’t keep pace with demand for those goods. Such supply-and-demand dynamics drove up prices.
