What will cost more — and less — in 2018

Social Security payments will rise by 2 percent next year, which means the cost of living, as measured by the Department of Labor’s Consumer Price Index, is also increasing. But it’s not all bad news for budget-conscious consumers. While certain items will cost more in 2018, inflation may be lower than historical averages and financial experts and economists say some goods and services could actually cost less in the coming year.

[See: How to Become a Super Saver.]

Here’s a look at three areas that are expected to cost more in 2018.

However, not everything is going to cost more. Experts say prices may soften in these areas:

Will cost more: 1. Health care. If you’ve been following the news, then you probably know that health care costs continue to rise. With repeated attempts to repeal the Affordable Care Act in part or full, health care costs remain a hot-button national issue. The PwC Health Research Institute projects medical costs to increase by 6.5 percent during the next calendar year. However, the Health Research Institute made the same prediction for 2016 and 2017 before recalibrating its projections to 6.2 and 6 percent, respectively. With fewer prescription drugs going off patent in 2017 and 2018, that means fewer opportunities for patients and insurers to save using a generic version of the medication. That said, the institute noted in a report earlier this year that public and political scrutiny of pharmaceutical prices could also push costs lower. (Thinkstock)

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Will cost more: 2. Groceries. The U.S. Department of Agriculture predicts overall grocery prices to increase by 1 to 2 percent next year. Still, the 20-year historical rate of annual inflation for groceries is 2.2 percent, so that isn’t an unusual increase. In fact, grocery prices declined in 2016 and may decline or remain flat in 2017. According to Annemarie Kuhns, an economist with the U.S. Department of Agriculture’s Economic Research Service, next year’s grocery price levels might still be lower than in 2015. Price increases vary by category with the USDA predicting the largest increases for eggs (5 to 6 percent) and fresh fruits (3 to 4 percent). One of the factors keeping grocery prices stable is the strong U.S. dollar, which means cheaper imports to the U.S. However, a “severe weather event or other factors could impact our projections down the road,” Kuhns says. [Read: These Foods Will Be More Expensive in 2018.] (Thinkstock)

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Will cost more:
3. Housing. Svenja Gudell, Zillow’s chief economist, predicts that average home prices will continue climbing, but at a slightly slower rate. “Currently we’re seeing 6.9 percent annual home value appreciation for the United States,” she says. However, home values are forecasted to rise by 3.1 percent from September 2017 to September 2018. “We’ll probably see some lower-end inventory hitting the market as builders shift to producing more entry-level inventory, but I don’t think it’ll be enough to address demand,” Gudell adds. On the rental side of the market, Gudell says according to Zillow data, rents have increased 2.1 percent from September 2016 to September 2017, but are projected to rise by 1.6 percent through September 2018. (Thinkstock)

Will cost less:
1. Smart home technology. Voice assistants such as Amazon’s Alexa, Google Home and other smart home devices have made their way into many American homes in recent years. In fact, statistics portal Statista reports that U.S. spending in the smart home market, which includes digitally controlled devices, sensors and control hubs, will top $15 billion in 2017. Carson Yarbrough, savings expert at Offers.com, predicts that increased competition and better technology could help drive down prices. “As time goes on, tech is easier to produce for a cheaper rate. [Everything from] smart plugs to switches to Nest thermostats, anything in your home can become computerized,” she explains. (AP Photo/Elaine Thompson, File)

AP Photo/Elaine Thompson, File

Will cost less: 2. Cosmetics. Andy Ballard, CEO of retail data company Wiser, predicts that some cosmetics and skincare products could cost less in 2018. “The barriers to distribution have been lowered by the interest from e-commerce,” he explains. “As a young makeup brand, it’s a lot easier to go direct to consumer with social media and the rise of influencers on social media. That’ll put pressure on more traditional makeup brands, so I think there’ll be some more downward pressure over the next 12 to 24 months.” [See: 10 Ways to Save on Your Wardrobe.] (AP Photo/Michael Dwyer)

AP Photo/Michael Dwyer

Will cost less: 3. Apparel. Luxury apparel brands will still carry high price tags, but Ballard predicts that increased competition will lower prices on clothing staples from more attainable brands. For instance, Walmart and Amazon are making a bigger push into apparel, especially with sportswear. He also expects to see more upmarket brands that offer “a lower-priced line that’s accessible for more consumers.” For instance, Missoni and Lilly Pulitzer have launched lower-priced versions of their clothes at Target. According to Ballard, “specialty brands that are small, often going direct to consumers” could also drop apparel prices. (AP Photo/Mark Lennihan)

AP Photo/Mark Lennihan

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