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Where life got pricier & cheaper in 2024

ALINA SELYUKH, HOST:

How did the cost of life in America changed this year? Prices overall have continued to climb, although more slowly than they had been, and some actually fell. Plus, the U.S. economy has avoided a recession. NPR's Scott Horsley has been tracking all this. He joins us now. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Hi, Alina. Great to be with you.

SELYUKH: So, Scott, you and I have been covering this for quite a while together. Shall we talk about some specific prices? I was kind of thinking we could start with breakfast. I don't know. What do you think?

HORSLEY: It is the most important meal of the day. And it did get a little bit more affordable this year. Eggs, which were a poster child for runaway inflation last year...

SELYUKH: Right.

HORSLEY: ...Saw a big price drop in 2023 as the flocks of laying hens recovered after that avian flu outbreak last year. At last count, egg prices were down 22% from a year ago. The price of bacon and butter also fell this year, with that down about 1%.

SELYUKH: I think among higher prices we have bread, which is obviously a breakfast staple. And that is more expensive by almost 4%. And I think there's been a huge spike in the cost of frozen juice. What's that about?

HORSLEY: Yeah. You were curious why frozen orange juice prices took off even as the price of fresh oranges was up only a little bit. And that's really a story about geography. You know, the oranges we eat mostly come from California and, to a lesser extent, Arizona and Texas. But the oranges we drink mostly come from Florida or Brazil. And production in Florida and Brazil has been hurt by both bad weather and Florida's ongoing troubles with citrus greening. So that's why we're seeing that big spike in orange juice prices.

SELYUKH: But overall, inflation has chilled out quite a bit.

HORSLEY: Yeah. It really has. You know, gas prices, which are some of the most visible prices in the country, have come down almost 9% over the last year. Grocery prices have pretty much leveled off. They were up a modest 1.7% over the last year. Compare that to a 12% jump in supermarket prices the previous year.

SELYUKH: It's a huge difference, 1.7% to 12%. Another key category we should touch on is obviously housing, where I believe costs are still climbing.

HORSLEY: That's right. Housing has been one of the more stubborn drivers of inflation. The average home sale price in November was up 4% from a year ago, and that's been made worse by rising interest rates. You know, a lot of people were just priced out of the housing market this year. But the worst of that could be behind us. You know, mortgage rates topped out at nearly 8% during the fall. They've since settled back to around 6.6%. And they are expected to fall somewhat further in the coming year.

SELYUKH: Maybe some good news for home ownership. Now, what about rent? Is it pretty high also?

HORSLEY: Yeah. And rents are still climbing, although not as fast as they had been. That's another reason we've seen some easing in overall inflation. Builders have been putting up a lot of new apartments this year, so that should help to keep rental increases in check. Average rents over the last year have gone up a little more than 3%.

SELYUKH: OK, so big picture, it seems like in many ways, 2023 became the year when life kind of began to look a bit more like it did before the pandemic. And I'm mainly thinking here in terms of the American shopping frenzy, which finally slowed down after two years of going bonkers.

HORSLEY: That's right. People are not spending quite as freely as they had been. Certainly, stuff's more expensive than it was pre-pandemic, and people are mindful of that. Shoppers are still spending, though, even if in some cases they have to borrow money to do so. This year we saw outstanding credit card debt top a trillion dollars, and that's costly debt with today's interest rates. And the good news is our savings rate has also climbed up from rock-bottom levels. And, of course, savers are also enjoying higher interest.

SELYUKH: Which - I think a big reason for that has to do with wages, right? I think one thing that really changed this year is paychecks finally started to outpace inflation. What is the story there, Scott?

HORSLEY: Yeah. This is the really good news of the last year. Inflation's come down without crippling the job market or causing a big jump in unemployment. The unemployment rate is still really low at 3.7%. So workers still have some bargaining power. Wages are still climbing. They're not going up as fast as they had been a year or two ago when employers were desperate to hire people. But the difference is wages are now rising faster than prices. So workers are seeing their real purchasing power increase, and the average paycheck goes farther now than it did before the pandemic.

SELYUKH: Wages catching up to inflation - that's a really big deal. How has this affected the economy, or, I guess, how does it bode for the new year?

HORSLEY: Well, the latest data shows the U.S. economy growing at a relatively robust 2.9% over the year. The Federal Reserve has signaled that it's probably done raising interest rates and could be ready to start cutting rates in the year to come. And that actually had stock markets ending the year at a near record high.

SELYUKH: That's NPR's chief economics correspondent Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.