A lot of things are getting cheaper. Here's why you probably haven't noticed.

• Inflation is still above the Fed's target, but many items are getting cheaper.
• The price of durable goods is deflating, though many Americans may not feel the impact.
• Groceries, health care, and other expenses are still inflating, hurting many Americans' wallets.

Even though inflation is still higher than ideal, many things are actually getting cheaper. But perhaps not the ones most Americans want.

The prices of durable goods, meaning long-lasting items such as used cars or appliances, have fallen year-over-year for each of the last five months. Per data released Thursday by the Commerce Department, prices for such goods were down 2.2% in October compared to the year prior.

Some economists estimate that the fall in goods prices could bring inflation back to the Federal Reserve's 2% target by as early as the second half of 2024. One inflation gauge, the personal-consumption expenditures price index, has fallen to 3% since peaking at over 7% in July 2022, partly due to declines in durable goods prices.

In fact, per the Wall Street Journal, Morgan Stanley economists believe inflation could fall to 1.8% by next September, though some Federal Reserve officials are more cautious.

But even though durable goods prices are expected to keep falling over the next few months, changing buying habits mean many Americans' wallets could still feel the heat from inflation. Shoppers continue to spend more on experiences like trips abroad, museums, and concerts while limiting purchases of goods, such as new vehicles, clothing, and furniture.

That decreased demand has helped push down goods prices. Consumer spending in October increased just 0.2%, even though supply chains have mostly recovered.

In fact, durables were getting progressively cheaper — by nearly 2% per year — from around 1995 to September 2020, before shooting up to nearly 11% inflation in February 2022 due to high demand and supply chain issues.

Other more volatile items experiencing deflation include energy commodities, gasoline, and energy services, which are down an average of 4.5% year-over-year.

To be sure, most items Americans are purchasing on the daily are still inflating. While many items are getting more expensive at a slower rate than a few months ago, prices for groceries, car insurance, and "fun" activities such as sporting events and concerts are all still increasing monthly.

Some items are falling rapidly — while others remain elevated

Many Americans are feeling the effects of clothing and groceries up 2.5% and 2.4% year-over-year in October. But recreational goods, household goods and appliances, and motor vehicles are all down year-over-year.

PCE data reveals prices for motor vehicles and parts fell 1.5% year-over-year — despite a nearly 2% increase in the price of new motor vehicles. Used autos had a 7.1% price decline during the same period, while motor vehicle parts and accessories fell around 1%.

Furnishings and durable household equipment fell 2.2% year-over-year, driven by a nearly 8.1% decline in household appliance prices. Prices of furniture and furnishings fell by 1.2%.

Meanwhile, the price of recreational goods and vehicles fell 4.3% during the period, driven by a 6.8% decrease in the price of video, audio, photographic, and information processing equipment and media — such as personal computers or cameras. Sporting equipment and supplies also fell by 2.5%.

Many businesses in these sectors have recently needed to cut prices to encourage more demand, especially as Americans continue to spend despite record credit card debt.

Still, while the prices of most durable goods are — and may continue — going down, many Americans aren't necessarily noticing or feeling the impact of these price declines as these purchases are pretty infrequent. Given Americans may invest in a laptop once every few years or buy a new desk twice per decade, lower durables prices may not amount to much compared to more frequent purchases.

For instance, the PCE for all nondurable goods shows an increase of nearly 1.6%. For food and beverages purchased for off-premises consumption, such as at a grocery store, prices increased over 2.4% year-over-year. Most food items, from meats to sweets, saw price increases, though dairy products on the whole became less expensive.

Clothing and footwear rose 2.5% year-over-year, as garments rose 2.9%. Other nondurable goods that saw price increases during the period include pharmaceutical and other medical products at nearly 4.1%, personal care products at almost 5.5%, and recreational items including games and pets at 0.5%.

Many Americans, particularly millennials and Gen Z, are investing more in experiences while cutting back on more tangible items. However, services are still becoming more and more expensive.

Services remained elevated at 4.4% year-over-year in October, down from a peak of 6% in February, according to Commerce Department data. This was driven by rising housing and utilities prices at nearly 6%, as well as nearly 2.6% for health care.

People aren't feeling deflation

For many Americans, everything still feels expensive, and still-high inflation for plenty of items — coupled with other financial pressures — has contributed to many Americans' gloomy feeling about the economy.

Even among HENRYs — or high earners, not rich yet — who make between $100,000 and $500,000, inflation has made many become more cautious about how they're spending. Many are pushing back home and car purchases, as well as delaying starting a family. Additionally, many wealthier Americans have resorted to shopping at dollar stores.

Many Americans are worried about layoffs, which have impacted the technology, public relations, and media sectors. This has pushed many to carve out larger nest eggs, which has for some been difficult given higher prices for daily expenses.

Wage gains have indeed stabilized more, and wages are finally rising faster than inflation. Still, when the price of admissions to a concert or football game have risen 10% year-over-year, according to the Consumer Price Index, the extra money made from a pay raise may not feel like much.

Renters may see some relief in the coming months, as the CPI shows year-over-year rental prices slowing gradually since March 2023. However, given that rent typically changes once a year, many consumers are less likely to notice slower increases.

Additionally, research from the Bank of America Institute found that childcare costs have increased over 30% since 2019. Coupled with the restart of student loan payments and over $1 trillion in credit card debt, even wealthy Americans are feeling the pinch.