That depends on the fabric. I agree with Gwendolyn that used goods stores are an excellent source of inexpensive fabric, but if you are looking for something specific then you may have to spend a bit on it. I like to shop at Indian fabric stores as much as possible. The fabrics are very different from what you find at a chain fabric store, and if you are buying in bigger quantities then you can usually haggle a bit. Plus the prices are often low to begin with.
I try never to buy anything at full price if I can at all help it. I like to see signs that say 40% off or more.
Walmart used to be a great resource for inexpensive, but decent quality fabric (sometimes took some digging, but I once found some magical 100% cotton in the $1 bin!). They seem to have gone downhill in the last year or two...I guess, suffering the effects of economic pessimism....
Sometimes there are great deals to be found at Wal Mart. The problem with Wal Mart is they are closing all the fabric department in most of their stores. It is the only place you can buy fabric in my area other than Memphis which is 70 miles away.
I am also concerned about the price of fabric. I have a limited amout of money I will spend on fabric at a time. Sales are one of the reasons I have so much fabric in my stash. I also love good quality fabric. If I don't think it is good quality fabric I don't want to waste my time on it, because I won't be satisfied with the results. I have occasionally found some good quality fabrics at Wal Mart, but you have to search for it. When I was sewing for my daughter when she was home, I would not spend a lot of money on fabrics for her, because she was not going to wear it for years like I would. I look for good quality in most of my suits, because I know I will wear them until I can no longer fit them. I try to buy the best quality fabric that I can afford. Sewing is a lot of work and time is valuable, so quality is what is important in fabric. If this quality is found on Ebay, Wal Mart, or a thrift store it does not matter.
I very rarely pay full price for fabric. I always look for deals and I always buy good quality 100% cottons. Check out Hancock Fabrics.com. They constantly send me emails when they are having a sale which seems to be at least once a month. You can get fabric from as low as 1.99 a yard and up. They list batiks, Hoffmans, and a variety. Guess when you're that large a store, you have to get rid of old stock to make room for the newest of new fabric. I use to have my sewing room and all my fabric organized by colors but with all my promises to myself to use up what's in my stash before purchasing new fabric, I just can't resist some of the newest "have to have it" fabrics! I don't think I could ever use up what I have stashed and I have fabric coming out of every nook and cranny in my sewing room!