Inflation is coming down, but prices won’t

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Matt Kliegman had been avoiding raising prices at Black Seed Bagels in New York City for years.

“You kind of hold on as long as you can,” said Kliegman, who finally raised prices 50 cents to $1 over the last few years as inflation surged. “And that came for many of us in this kind of period after COVID.”

Now, the economy is in a different place. The Federal Reserve’s interest rate cut signaled a turning point in this multi-year battle with inflation, and inflation continues to fall. That’s good news for consumers, but it’s also created some confusion as to why prices aren’t coming down along with interest rates.

To explain, let’s break down what goes into the cost of a bagel at Black Seed Bagels, which sells for around $2:

Ingredients: 40 cents

Rent: 20 cents

Repairs and maintenance: 10 cents

Napkins and other paper products: 10 cents

Utilitie …

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