In the case of consumer goods, these developments have directly held down the rate of increase of the imported-goods component of the consumer price index (CPI) and, thus, the rate of increase of the overall index; this direct effect on CPI inflation has risen over time as the import share of household spending has increased.
Beyond this effect, falling prices for imported materials as well as capital equipment have reduced the production costs of U.S. firms, thereby indirectly restraining the growth of prices of domestically produced goods and services. Globalization has reinforced disinflation by intensifying the competitive pressures faced by U.S. firms and workers.