10 Things That Will Cost Less in 2023
Yes, there are signs of hope for your budget! Find out which items will be the cheapest things to buy in the new year.
Your best bets for a deal in the new year
Do you find yourself searching for the cheapest things in the world yet keep running into dead ends? Inflation has made just about everything more expensive lately. In fact, Consumer Price Index (CPI) data from September 2022 showed that prices in all major categories rose a whopping 8.2% in just one year. And prices that seemed to remain constant were also an illusion, caused by a phenomenon known as shrinkflation. In 2022, people tried all sorts of budgeting tricks, finding creative ways to save money on gas and researching the best time to buy anything, and some may have even bought cheap items that ended up costing more. What will 2023 hold?
“The CPI will continue to rise but at a slower rate,” says Sung Won Sohn, PhD, professor of finance and economics at Loyola Marymount University. “And with the economy clearly slowing, demand is softening. When demand softens, that generally means lower prices.” Combine this news with the fact that many retailers are stuck with extra inventory, and consumers can expect to score some great deals.
We spoke with financial experts to find you silver linings and potential opportunities for savings in 2023. While some list prices may not be radically lower, there are lots of ways to be savvy and find merchandise and services that cost less, ultimately helping you keep more cash in your wallet.
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The price of new cars has been soaring due to an ongoing semiconductor microchip shortage, as well as increased costs for raw materials. In the United States, the average price of a new vehicle was up 6.3% in the last year, according to a recent report from J.P. Morgan. But now, there’s finally some relief in sight.
“With interest rates rising and inflation crushing the average consumer, car prices have to come down,” says Dave Anderson, founder of BMOGAM Viewpoints. “Dealers don’t actually own the cars—they get huge loans from the banks to buy their inventory. The longer a car sits on their lot, the more they have to pay in interest to the bank. Many dealers are still resisting lowering prices to meet the new market realities, but this will change.”
New car prices are expected to remain high through the end of 2022, but J.P. Morgan expects them to decline by 2.5% to 5% in 2023. Translation: If you can wait until the new year, that will be the best time to buy a car.
Financial experts expect the price of used cars to be cheaper for 2023 too. During the pandemic, the supply-chain issues that made it hard to get new cars also increased the demand for used cars—and elevated their prices. Consumers could afford those prices too, because of a flush of stimulus cash they’d received.
“However, with supply chains normalizing and car financing becoming more expensive due to higher interest rates, these favorable supply/demand dynamics have gone into reverse,” explains Harry Turner, founder of The Sovereign Investor. “As a result, this will bring down used-car prices from their current inflated levels.” According to J.P. Morgan’s research, expect to see those prices decline by 10% to 20%.
Since the economy is slowing, Americans are buying less. There is also the looming threat of recession and rising credit card debt pinching people’s pockets. Stores including Target, Gap, Abercrombie & Fitch, American Eagle and Kohl’s are also under pressure to get rid of the excess merchandise they accumulated in the first half of the year, according to CNBC. As a result, experts say that consumers can expect to see prices slashed on clothing via sales and promotions in the new year. Pro tip: Maximize your savings by learning the best time to buy clothes every season.
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Like so many other items during the pandemic, appliances were affected by supply-chain issues, which drove up pricing and, eventually, availability. Plus, with everyone staying home—and focusing on their homes—there was an increased demand for everything from washers and dryers to fridges. “Now, retail stores are stuck with too much inventory, and as a result, they are running sales,” explains Sohn.
We’ve already started seeing some price cuts over the last few months, but those discounts will get even steeper in 2023, say experts. While inflation hit all industries, appliances haven’t been affected as much as other big-ticket items like windows, doors, kitchen cabinets, countertops and floors. That means it will be a very good time to buy appliances very soon.
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“TVs have been about as low as they could be for several years now, but you can increasingly get higher-end models in bigger sizes for lower prices,” says Stan Horaczek, executive gear editor in charge of commerce for Popular Science. “It’s not out of the question to get a 55-inch TV for $300 or less without a shopping holiday like Black Friday.” Experts expect this trend to continue in 2023, due to supply-chain bottlenecks clearing up, excess inventory taking up space in warehouses, consumer spending tightening, and newer and better models being released in record time. Consumers looking for even steeper discounts on TVs can also opt for older models.
Nonessential items at big-box stores
People are changing the way they approach shopping. That’s partly due to inflation and partly due to changing lifestyles as more of us return to the office and our prepandemic activities. Case in point: That fire pit may have seemed essential when we were cooped up at home for months on end, but now, our purchasing priorities may lie elsewhere.
Stores like Target have specifically named outdoor furniture and fitness supplies as some of the nonessential surplus they are trying to manage … and move out the door. In fact, we’re already seeing some of these price cuts, from strength-training equipment at Target to patio sets at Walmart. Big-box retailers are also looking to sell their inventory of indoor furniture, organizing products and kitchen gadgets over the next few months.
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Yes, they make life so much easier, but when money is tight, are you willing to shell out the extra cash for something you could really do yourself? Probably not … unless the prices come down to a point where you really can’t say no. That will be the case for convenience services like Uber Eats, GrubHub, Waitr and Door Dash, which have already seen sales decline, according to the Wall Street Journal.
This demand slowdown will translate to great deals and promotions, as well as lower fees associated with convenience services, predicts Forrest McCall, owner of the site Don’t Work Another Day. “With increasing competition and a softening demand due to inflation,” he explains, “this will put downward pressure on prices for these [services].” Looking to keep more of your hard-earned cash in your bank account? Here are more effortless ways to save money.
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Remember during the early part of the pandemic when bicycle riding surged in popularity? Fewer cars on the road, plenty more hours working from home and the chance to engage in an activity that was deemed “COVID safe” made demand for bikes skyrocket.
“People needed an outlet for both their physical and mental health. Bikes were tough to find, and expensive,” notes Emily G. Irwin, managing director at Wells Fargo Wealth & Investment Management. “Now, as people get back into their prepandemic routines and habits, there may be an opportunity to snag a used or barely used bike for a good deal, or even a new bike on sale.”
Your income taxes may cost less in 2023, due to the newly passed Inflation Reduction Act. “The IRS has adjusted both the tax tables and the brackets that inflict the most pain on the average taxpayer by taking into consideration that inflation pushes taxpayers into higher tax brackets even when there has been no betterment in their financial situation,” says Howard Chernoff, president of TaxLaw Inc. This could mean you’ll pay a lower tax rate, depending on your income.
The standard deduction for 2023, which is used to help lower taxable income, will also increase for 2023. Single filers had a standard deduction of $12,950 for 2022, but in 2023, it will be $13,850. For married couples filing jointly, the deduction will increase from $25,900 to $27,700.
You may also see additional income-tax savings if you are a homeowner who purchases energy-saving home improvements or an electric car. Homeowner tax credits will extend to solar projects, energy-efficient water heaters, heat pumps and HVAC systems. Furthering the green agenda, tax credits for buying a new or used electric vehicle have been extended another 10 years, until December 2032.
Medical expenses can be painful and will never be ranked among the cheapest things in the world (or at least America), even with insurance. But the Inflation Reduction Act will now allow Medicare to negotiate lower prices for some prescription drugs. While some of these savings will be rolled out slowly over the next several years, some big savings will start in 2023. For example, people who take insulin and have Medicare prescription-drug coverage will have their out-of-pocket cost capped at $35 per month, providing welcome predictability around medical costs for those who have had to deal with wild price fluctuations.
In addition, beginning in 2023, adult vaccines for shingles and tetanus-diphtheria-whooping cough vaccines won’t incur any out-of-pocket costs. Finally, drug manufacturers will be required to pay rebates to Medicare for certain drugs that increase in price faster than inflation. This rebate law will also help keep prices steadier and reduce unexpected sticker shock, making this very good news for savings in 2023 if you’re on Medicare.
- U.S. Bureau of Labor Statistics: “Consumer Price Index”
- Sung Won Sohn, PhD, professor of finance and economics at Loyola Marymount University
- Dave Anderson, founder of BMOGAM Viewpoints
- J.P. Morgan: “Inflation and the Auto Industry: When Will Car Prices Drop?”
- Harry Turner, founder of The Sovereign Investor
- CNBC: “Retailers’ biggest holiday wish is to get rid of all that excess inventory”
- TheStreet: “Supply Chain Issues or Not, Now Is the Time to Buy That Refrigerator”
- Stan Horaczek, executive gear editor in charge of commerce for Popular Science
- Forrest McCall, owner of Don’t Work Another Day
- Wall Street Journal: “Uber Eats, DoorDash Offer New Deals to Court Customers as Growth Cools”
- Emily G. Irwin, managing director at Wells Fargo Wealth & Investment Management
- IRS: “Inflation Reduction Act of 2022”