A yearslong run of higher prices has unmoored many Americans’ expectations of what daily purchases should cost, from a cup of coffee to a package of paper towels. Shoppers are also put off by paying the same or higher prices for smaller amounts of stuff, what’s known as shrinkflation. They remain markedly higher than they were before the pandemic began, and Americans’ expectations for how much goods and services should cost haven’t caught up. The Federal Reserve’s rate-rising campaign has sought to tamp down the pace of price increases, not lower them. “I don’t think people understand that things won’t go back to the way they were," he says.

Source: Wall Street Journal March 14, 2024 02:11 UTC