Falling prices have led to the lowest inflation rate in four years, according to data from the Bureau of Labor Statistics. Egg prices dropped by the most since 1984, and used cars and trucks also got cheaper despite auto tariffs. However, some experts warn that this trend may be a sign of weaker consumer demand due to policy changes, trade war uncertainty, and financial market turbulence.
The decline in airfare, hotel prices, and sporting event ticket prices is attributed to softer demand for discretionary services. Google searches for flights were low in April, indicating a lack of confidence among consumers. However, restaurant reservations are up despite lower food prices, suggesting that consumers are not pulling back on spending.
Airlines have cut their financial guidance due to concerns about the US economy, and foreign travel into the country has cooled. Some experts argue that this trend may be a sign of weakening demand, while others believe it’s just a temporary effect, such as the timing of Easter or lower fuel prices. Despite this, economists caution that the subdued inflation readings are likely temporary, as historically-high tariffs will strengthen in the coming months.
With oil prices still relatively low, some experts see this trend as a “calm before the storm.” The trade war and its impact on prices is expected to intensify in the future, potentially leading to higher inflation rates.
Source: https://edition.cnn.com/2025/05/14/business/inflation-trump-airfare-prices