Broadly speaking, no, overall prices in stores are not lower than they were a year ago. Instead, they are generally higher, though the rate at which they are rising has slowed down significantly.
To understand why this is, it helps to look at a few key economic concepts and how different categories of goods are behaving.
1. "Disinflation" vs. "Deflation"
When news reports mention that "inflation is cooling" or "falling," it does not mean prices are dropping.
•Disinflation (What is happening): Prices are still going up, just at a slower, more normal pace than before. For example, if a cart of groceries rose by 10% two years ago, but only rose by 2% this past year, that is disinflation. The groceries are still more expensive than they were a year ago, but the price hike was much smaller.
•Deflation (What would make prices lower): This is when prices actually drop below what they were the previous year. True deflation across the entire economy is very rare and usually only happens during severe economic downturns.
Because major economies (like the U.S., Canada, Europe, and the UK) have been experiencing disinflation rather than deflation, overall store prices remain higher than they were a year prior.
2. How Different Store Categories Compare
While overall prices are higher, whether you see lower prices depends heavily on what you are buying:
•Groceries (Mainly Higher): Food-at-home prices are generally higher than they were a year ago, though the annual increase has slowed to a crawl (often around 1% to 2% annually, compared to the double-digit spikes of 2022). However, certain specific commodities (like eggs, apples, or pork) occasionally drop in price year-over-year due to supply chain recoveries or agricultural cycles.
•Electronics and Appliances (Often Lower): This is one of the few areas where you might actually find lower prices compared to a year ago. Due to rapid technology cycles, improved shipping costs, and retailers clearing out excess inventory, items like TVs, laptops, and major appliances frequently experience year-over-year price drops.
•Apparel and Shoes (Flat to Slightly Higher): Clothing prices tend to fluctuate. Some retailers have kept prices flat or offered steeper discounts to attract budget-conscious shoppers, but on average, apparel prices remain slightly higher or unchanged compared to last year.
•Gasoline and Energy (Highly Volatile): Depending on the exact month, gasoline prices are one of the most common items to actually be cheaper than they were a year ago, as global oil markets fluctuate constantly.
Why It Still Feels So Expensive
Even if prices only rose by 1% or 2% over the last year, consumers are still feeling the cumulative effect of the massive inflation spike that occurred between 2021 and 2023. A basket of goods that cost $100 in 2020 might now cost $120 or $125. Even if that basket only goes up to $126 this year, shoppers still feel the sting of how much cheaper things used to be just a few years ago.