Inflation is cooling, but prices on many items are going to stay high for months

Key Points

• Slowing inflation hasn't brought relief for consumers yet because prices are still well above where they were a year ago.
• Commodity and freight costs are falling, but won't immediately trickle down to consumers in part due to supplier contracts and some companies' desire to boost profit margins.
• But retailers are fighting back by pushing their private label products, which could win over consumers with cheaper prices and force manufacturers to offer better deals.

A grocery store in New York.

Wang Ying | Xinhua News Agency | Getty Images

Inflation may be cooling. But, for most Americans, the price of a cup of coffee or a bag of groceries hasn't budged.

In the months ahead, the big question is whether consumers will start to feel relief, too.

Over the past few months, many of the key factors that fueled a four-decade high in inflation have begun to fade. Shipping costs have dropped. Cotton, beef and other commodities have gotten cheaper. And shoppers found deeper discounts online and at malls during the holiday season, as retailers tried to clear through excess inventory. Consumer prices fell 0.1% in December compared with the prior month, according to the Labor Department. It marked the biggest monthly drop in nearly three years.