Why Prices Climb Quickly and Crawl Back Down

Lately, we all keep hearing:

“Inflation is down, so why aren’t prices dropping?”

It’s a great question, and after 20+ years in operations and pricing, I can tell you:
Prices react to pressure instantly… and relax only when forced.

In fact, I used to joke that I deserved an Academy Award for delivering price-increase messages to customers. And one thing we never said? “Lower pricing.”

The corporate-approved term was always: “We’re making a price adjustment.”
If that doesn’t tell you which direction pricing typically moves, nothing will.

So why do prices go up like they’ve been launched out of a cannon, but come back down slower than your patience on a Monday morning?

Here are 7 factors that actually drive pricing behavior in today’s market:

1. Costs Don’t Reverse

Wages, benefits, insurance, and utilities, once they rise, they don’t return to pre-inflation levels. Permanent cost increases create permanent price floors.

2. Businesses Are Still Selling Through High-Cost Inventory

Companies stocked up when prices were at their peak.
They can’t lower selling prices until they clear out elevated-cost materials, unless they accept losing margin. They don’t!

3. Capacity & Labor Constraints Are Still a Challenge

Skill shortages, long training cycles, and capacity limits maintain upward pricing pressure even when broader inflation cools.

4. Companies Are Rebuilding Margin Lost During Volatile Times

Freight spikes, material shortages, and supply chain chaos hit margins hard.
Levels stayed higher, not out of greed, but out of necessity.

5. Risk Now Seems Like a Permanent Line Item

Geopolitical instability, supply chain uncertainty, and even weather disruptions are baked into pricing today.  We tend to price for resilience now, not just product.

6. Customer Expectations Tend to Reset Quickly

Once the market accepts a new price level, companies avoid lowering it because:

• It signals reduced value

• It creates expectations they may not meet later

• It makes future price increases harder

Once you reset price downward, you don’t get that ground back easily.

7. Psychology Matters

Raising prices is easy to explain: “Our costs went up.”
Lowering prices?  That triggers questions companies prefer not to answer.

That’s why “price adjustment” tends to be a one-way street.

The Bottom Line

From my own experience, prices rise quickly because businesses are reacting in real time to rising costs and market pressures.  Coming back down takes much longer because the economics underneath: labor, inventory, risk, and customer expectations, simply move at a slower pace.

Until those pieces change, pricing isn’t going to budge.