For Many Consumer Items, Prices Falling, Not Rising

by: Mark J. Perry

Item % Change Last Year
TVs -16.26%
Software -9.23%
Computers -7.95%
Toys -5.46%
Photographic Equipment, Supplies -4.69%
Audio Equipment -3.91%
Sports Equipment -3.89%
Clothing: Infant and Toddler -3.56%
Cell Phone Service -3.50%
Audio Disks -3.17%
Leased Cars and Trucks -2.98%
Pets and Pet Supplies -2.54%
Appliances -2.29%
Hair, Dental, Shaving Products -2.10%
Video Disks -1.95%
Information Processing -1.84%
Living Room and Kitchen Furniture -1.60%
Natural Gas -1.50%
Furniture and Bedding -1.43%
Internet Services -1.28%
Apparel: Men's -1.20%
Recreational Reading Materials -1.18%
Video Audio -1.13%
Clothing: Women and Girls -0.75%
Footwear -0.66%
Click to enlarge

This is an update of a post I featured in February:

Rising food and energy prices have received a lot of media attention lately, along with concerns about the threat of rising inflation. The chart above (using BLS data via Economagic) shows a sample of 26 products or services that have experienced deflation in the last year (April 2010 to April 2011) based on new CPI data released today by the BLS.

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 or ten years ago in many cases.

Or maybe it's because we buy computers, TVs, appliances, and lease new cars INFREQUENTLY (every 5 years 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 amount of mis-perception among the general public and media that ALL prices are going up, which the data above show is clearly not the case.

Overall, general inflation is a period when most prices (and wages, interest rates and home prices) are rising, and I don't think we're anywhere close to meeting those conditions yet. Not as long as so many prices are declining or staying the same, and not rising.