Will Prices Ever Go Down? For Some Things, They Already Have

You won’t see prices return to pre-pandemic levels but that doesn’t mean they won’t come down at all.

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Edited by other Updated May 15, 2025 Updated on May 15. Updated on May 15. Americans likely won’t see prices return to pre-pandemic levels. If it were widespread, falling prices — known as deflation — would be seen as a sign of a shrinking economy, which is characterized by less spending, fewer jobs and declining business investment. But that doesn’t mean prices won’t come down at all. That’s already happening in some sectors. Some costs related to travel — like lodging, car rentals and airline fares — are down compared to a year ago. And prices for some goods have fallen as well, including for gas, smartphones and other electronics. In April, prices were lower year-over-year for nearly a third of the goods and services categories tracked by the consumer price index.

But deflation is not the goal

Falling prices sound appealing but widespread deflation can negatively impact the economy. Consumer behavior: Don’t underestimate the power of consumer sentiment. When consumers expect prices to fall, they might hold off on making purchases, hoping to get a better deal later. Consumer behavior: Business investment: Lower demand for goods and services means business slows down, putting the breaks on hiring, productivity and other business activities. Business investment: Jobs and wages: High inflation made everything more expensive but it also boosted wages, especially in sectors that experienced labor shortages. Widespread deflation would have a similar effect — but a negative one. Slow business tends to lead to job cuts. And with more people looking for work, there’s no reason to raise pay. Jobs and wages: All of this is part of what monetary policymakers call a “deflationary loop,” according to the Federal Reserve Bank of St. Louis. In this kind of loop, as consumers spend less, companies make less money and might respond by cutting wages or jobs. The loss of income means consumers have less money to spend, and on the loop goes.

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Slower inflation could still mean cheaper stuff

So, rather than reverse inflation, monetary policymakers at the Federal Reserve want to slow it down, aiming for an annual inflation rate of 2%. An economic term for that is disinflation. That’s been the story lately. The inflation rate is much lower now compared to when it peaked at nearly 9% in mid-2022. In fact, the annual inflation rate finally fell below 3% in June 2024, according to the CPI. In April, the annual inflation rate was 2.3%. The Fed worked to achieve disinflation by raising the federal funds rate. That was meant to throttle demand for goods and services by making it more expensive to borrow money. As inflation nears the 2% target, the Fed could cut rates. That could effectively make some things cheaper for consumers by lowering the cost of borrowing for things like cars and homes. The Fed cut rates three times in 2024. But it has opted to pause rates so far in 2025 as it waits to see how tariffs impact the U.S. economy. The original version of this article was published in November 2023 and written by senior writer Anna Helhoski. It was substantially updated in September 2024. The original version of this article was published in November 2023 and written by senior writer Anna Helhoski. It was substantially updated in September 2024. Explore more on About the author Phaneuf Taryn Phaneuf is a lead writer & content strategist covering wealth management, financial planning and other investing topics at NerdWallet. She previously reported on personal finance news. Prior to joining NerdWallet, she spent more than a decade covering education, public policy and business for various news outlets. She also taught journalism as an adjunct instructor at her alma mater, the University of Minnesota. She lives in Minnesota. Published in Gas Prices Slip Below $4 as Iran Deal is Signed Why Is Food So Expensive? U.S. Adds 172,000 Jobs in May, Beating Expectations Again Egg Prices Remain Largely Stable By Taryn Phaneuf Trump’s Tariffs Begin: Here’s What Could Get More Expensive By Taryn Phaneuf Austin Is Booming. So Why Are Rents Falling? By Taryn Phaneuf Can Trump Lower Gas Prices as President? By Taryn Phaneuf Why Is My Car Insurance So High? By Kayda Norman, Ryan Brady, CFP® Travel Inflation Report: June 2026 By Sally French, Benjamin Din Are Car Prices Going Up or Down? By Shannon Bradley How to Shop Amid Tariff Uncertainty By Kimberly Palmer Southwest Ditches Free Bags, Adds Basic Fares By Craig Joseph