Grapevine

Here's the deflation breakdown for August 2024 — in one chart

Inflation cooled in August and fell to its lowest level since February 2021, which was around the time the consumer price index began to climb during the pandemic era. This broad trend in the U.S. economy — a declining but still-positive rate of inflation — is known as "disinflation." It means that, in aggregate, the average prices of goods and services are rising, just more slowly. However, there are also pockets of "deflation." Their inflation rate is negative, meaning prices are falling.

Deflation has largely been happening for physical goods such as cars and household appliances, though it has also appeared in categories such as gasoline and various groceries over the past year, according to the consumer price index. That said, consumers shouldn't expect — or root for — a broad and sustained fall in prices across the U.S. economy. That generally doesn't happen unless there's a recession, economists said.

'A huge shift in demand'

Prices for "core" goods — commodities excluding those related to food and energy — have deflated by about 2% since August 2023, on average, according to CPI data. They fell 0.2% during the month, from July to August 2024.