After a year of rising prices in most consumer categories, here's some good news: Commodity costs are finally dropping and will continue to fall in 2015.
In the food category, the cheaper grains used in animal feed, especially corn, are making some grocery store items — from milk to bacon to chicken — more affordable. Corn traded at $3.50 a bushel in September, which was half its peak in 2012.
But this won't apply to small chickens, considering they're in high demand from some restaurant chains and supply is relatively low.
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Also, the price of wheat is slated to go up, so don't expect the price of bread, pasta and cereal to go down this year. Just as well for those of us who have sworn off carbs in an effort to lose weight.
The falling price of oil will also benefit consumers, and particularly drivers, resulting in everything from cheaper gas to slightly more affordable airline tickets.
However, lower gas prices have encouraged more American consumers to drive big cars and SUVs again. With higher demand, the prices of these types of vehicles will likely go up.
Continued low inflation also means that gold will be cheaper, since investors won't be looking for an inflation hedge this year.
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With falling oil prices and low inflation in general, the need to purchase gold as an inflation hedge is simply not there, which is pushing its price down. Bloomberg reported that after rebounding about 4 percent from a four-year low in early November, prices will average $1,175 next quarter, while Société Générale expects $950 in 2015's fourth quarter.
Milk
Several factors will bring the price of milk down, including lower feed prices and lower milk exports. U.S. dairies are also expected to increase milk production this year, which, at an anticipated 212.8 billion pounds, could reach a record. "That's the biggest production increase I've ever seen," AgDairy Market's Robin Schmahl, a dairy market expert, told AgWeb.
New homes
Builders are planning to lower the price of new homes to boost the volume of units sold, which has stood around or lower than 450,000 a year since the recession, to at least 500,000. "In 2015, I expect builders to try to push above that ceiling on new home sales," Stan Humphries, chief economist at Zillow, told Forbes. "To do that, they're going to have to sell less expensive homes."
Smartwatches
New products from Chinese vendors will put pressure on existing players such as Fitbit, which will be forced to lower the price of smartwatches. "Chinese vendors might be able to bring Android Wear-based smartwatches to very affordable price points below $150 with decent designs and sensors — driving mass-market adoption in mature markets," said Angela McIntyre, research director at research company Gartner.
Airfare
Airline fares are expected to drop thanks to cheaper oil, according to International Air Transport Association. "It's going to be six months or so before airlines are seeing lower fuel costs, and at that point consumers are likely to see a fall in travel costs," Brian Pearce, IATA's chief economist, told AP. However, the savings to the consumer will be minimal and certainly not in line with the dramatic fall in oil.
Chicken
Poultry is benefiting from lower feed, particularly corn prices. DeWayne Dove, vice president at food purchasing co-op SpenDifference, expects chicken breast prices, which are already low, to fall 4 to 5 percent this year. However, some restaurant chains, including Popeyes Louisiana Kitchen, are expecting the price of small chickens, which are in lower supply, to increase, according to a November Restaurant News report.
Gas
Opinions differ on whether oil prices will continue to drop or not, but those who see it falling further look to continued strong supply and subdued demand as the U.S. shifts to natural gas. The price has fallen to below $50; the Energy Information Administration expects gas prices to remain under $3 a gallon this year.
Bacon
Bacon lovers, rejoice. The price of your favorite food, which rose in 2014 due mostly to the deadly PED virus, is bound to fall in 2015 thanks to cheaper feed prices, particularly corn. DeWayne Dove, vice president at Denver-based food purchasing co-op SpenDifference, expects bacon prices to fall 15 to 17 percent in 2015.
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