The Great Deflation: Computer Prices
Matt Yglesias posted yesterday about the "falling price of computer power" and highlighted the chart above from this website showing falling prices for Apple products over the last five years.
The chart below shows the downward trend in computer prices over a longer period of time using the BLS series "CPI: Personal Computers and Peripheral Equipment" (data here). Compared to the CPI for Personal Computers of 129.4 in January 2006 when the iMac above was selling for $1,299, the index value for the CPI in January 2011 was 43.6% lower at 72.95. That decline tracks pretty closely with the 36.2% drop in Apple prices over the same period, from $1,299 to $829.
Over a longer period of time, like the full history of the CPI series for personal computers back to December 1997, personal computer prices have fallen by 93.5% (see chart below). In other words, assuming that the CPI series accurately captures quality improvements, computer equipment that cost $1,000 in December 1997 could be purchased today for only $65. Alternatively, as a very rough approximation, computer equipment purchased today for $1,000 would have cost $15,300 back in 1979.
HT: Steve Bartin