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Rising food and energy prices have received a lot of media attention lately, along with concerns about the threat of inflation. The chart below (using BLS data via Economagic) shows a sample of products that have experienced deflation in the last year (January 2010 to January 2011).


Item % Change Last Year
TVs -17.81%
Photographic Equipment, Supplies -10.50%
Software -10.34%
Computers -6.86%
Toys -4.65%
Sports Equipment -4.11%
Cell Phone Service -4.03%
Leased Cars -3.86%
Appliances -3.39%
Audio Disks -2.81%
Clothing: Infant and Toddler -2.78%
Video Audio -2.62%
Pets and Pet Supplies -2.54%
Tools and Hardware -2.12%
Video Disks -1.95%
Stationery -1.54%
Nonprescription Medical Supplies -1.43%
Clothing: Women and Girls -0.88%
New Cars -0.78%
Footwear -0.72%


One reason we don't pay much attention to these price decreases is probably that they happen so gradually and consistently over time, so we either: a) don't notice the falling prices, or b) take it for granted and don't appreciate the incredible savings over time in many of the products that we all buy. There are many, many products like computers, cameras, new cars, clothing, TVs, appliances, electronics, software, etc. that are significantly cheaper today than a year ago, and are probably cheaper today than five years ago and ten years ago in many cases.

Or maybe it's also because we buy computers, TVs, appliances, new cars INFREQUENTLY (every 5 year or more in some cases), and don't notice or appreciate the price decreases the same way we notice price changes for food and fuel that we purchase FREQUENTLY? But there does seem to be a certain degree of mis-perception among the general public and media that ALL prices are going up, which is clearly not the case. And since inflation is a period when most prices (and wages) are rising, I don't think we're anywhere close to meeting that situation yet. Not as long as so many prices are declining, not rising.

Update: See today's front page WSJ article "Split in Economy Keeps Lid on Prices," here's a quote:

"The conflicting forces: Soaring commodities costs world-wide are pushing up prices for many goods, while a slowly recuperating U.S. economy, soft housing market and a persistently high unemployment rate are holding down prices for U.S. services.

Goods prices were up 2.2% from a year earlier, paced by jumps in food and energy prices, according to the Labor Department's January consumer-price index, and are rising faster than they did before the recession. But services prices were up only 1.2% from a year earlier, far below the 3.4% inflation rate registered for services between 2000 and 2008."

Rising food and energy prices have received a lot of media attention lately, along with concerns about the threat of inflation. The chart below (using BLS data via Economagic) shows a sample of products that have experienced deflation in the last year (January 2010 to January 2011).
Source: For Some Consumer Goods, Prices Are Actually Falling