Sunday, July 22, 2012

For Many Consumer Items, Prices Are Falling


Item% Change
      Last Year      
Food (actual prices)
Butter-14.5%
Lettuce-13.2%
Bacon-10.9%
Rice-9.6%
Cabbage-9.2%
Ham-7.2%
Milk-6.2%
Bread-5.8%
Broccoli -4.5%
Tomatoes-4.3%
Bologna-3.0%
Peppers-3.0%
Chuck Roast-2.7%
Malt Beverages-2.7%
Flour-1.7%
Turkey-1.5%
Bananas-1.5%
Potatoes-1.3%
Eggs-0.8%
Energy
Natural Gas-13.6%
Fuel Oil-8.1%
Gasoline-4.1%
CPI: Household Items
Televisions-19.5%
Computers-8.1%
Leased Cars -6.5%
Toys-5.5%
Computer Software-4.3%
Photographic Equipment-4.2%
Sports Equipment -1.4%
Wireless Phone Services-0.6%

The chart above shows a sample of 30 products or services that have experienced deflation in the last year (June 2011 to June 2012 for most items).  The 19 food items and three energy items are based on actual "average price data" from the BLS, and the household items are based on CPI indexes for those items.


Overall, "inflation" describes 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. Certainly not as long as so many prices for food, energy and household items are declining or staying the same, and not rising.  Any notion that "real" inflation is now running about 8-10% at an annual rate according to some adjusted "real" measure of consumer prices seems to be very misguided, and not supported by the actual price data presented above for many food and energy items.  

26 Comments:

At 7/22/2012 6:37 PM, Blogger sethstorm said...

If your wages are falling faster that those wages are falling, those decreases are moot.

 
At 7/22/2012 7:16 PM, Blogger lakristinita said...

My wages are decreasing every year. I dont know where you got your stats from but I know one is off for sure. 20 lb bag of rice last year at Costco was 9.79 I have watched it go up in price very few months to the high price of 16.97. that is crazy,, along with the pinto bean. And what about the sky high price of the coffee bean. I only see the gas prices going down due to war and manipulation. If we take over your country and take your assets and resources then we get it cheaper. Nice try with this post but I feel that it is not accurate.

 
At 7/22/2012 7:22 PM, Blogger Ken said...

lakristinita

I dont know where you got your stats from

Mark clearly states he got his stats from "'average price data' from the BLS". Is that really so hard to understand?

Also, my wages have gone up pretty dramatically over the last couple years. I just bought rice and pinto beans yesterday and hadn't noticed any increase in price. Therefore, by my anecdotal evidence you must be completely wrong, right?

If we take over your country and take your assets and resources then we get it cheaper.

Wrong. You act as if going to war and taking things is cheaper than simply trading. It's not. Trading is cheaper.

But it's cute when children try to act like grown ups. Good for you!

 
At 7/22/2012 8:05 PM, Blogger Benjamin said...

The hyperinflation predicted by hysterics and most right-wingers has not come to pass---indeed, by some measures we are still in a deflation. It is cheaper today to buy a house and live than five years ago, almost anywhere in the United States.

Unit labor costs are flat to down, while commercial rents of all types are very soft.

QE in the USA did not lead to inflation, just as it did not in Japan.

The empirical evidence suggests QE boosts real output, while paying down the national debt. What is not to like?

I can't understand the Chicken Inflation Littles. If the world does not conform to their theories, then they try to refute the data.

 
At 7/22/2012 8:12 PM, Blogger lakristinita said...

I trust Gerald Celente when it comes to anything to do with the trends of the economy. I am surprised that you could even find 30 items,, how many items are on those lists to start with?

 
At 7/22/2012 8:21 PM, Blogger lakristinita said...

Well Ken,, I dont think it is such a good idea to attack your readers,, just for asking a simple question. I guess you could have explained where BLS gets their info from,, but instead you insult and attack me. I guess they did not teach you much in school, such as how to play nice in the sand box. I find it interesting that your wages have gone up,, when the rest of us are getting our pay cut every year,, and I purchase these items on a regular basis and have been watching the pries jump. Maybe you have someone that shops for you so you dont notice these things. But everyone that I work with says the same thing.

Again sorry that you feel that the only way to respond to a reader with a question is to insult them,, or maybe I am the first one you have done this to.

I hope you see the light one day,, we are screwed and everyone knows it.

War has been used since the beginning of time to take others resources, this is not a new concept.

In kind regards,

 
At 7/22/2012 8:32 PM, Blogger jorod said...

But education is up about 10% per year. And that's a big ticket item. I can't believe commodities are cheaper with the drought. Gasoline is still extremely high. Water bills are shooting up. States and local governments are raising taxes. And the Federal government is more rapacious than ever.

 
At 7/22/2012 9:02 PM, Blogger juandos said...

"The hyperinflation predicted by hysterics and most right-wingers has not come to pass---indeed"...

Well we can depend on the pseudo benny to alway make a thoroughly inane and completely delusional comment regardless of the inflation rate...

 
At 7/22/2012 9:19 PM, Blogger Hydra said...

You aint seen nothing yet. The corn disaster will affect everything.

 
At 7/22/2012 10:37 PM, Blogger Benjamin said...

Hydra-

But will the corn blight destroy the GOP's renewable, sustainable and subsidized, mandated moonshine: socialist ethanol?

 
At 7/22/2012 10:37 PM, Blogger VangelV said...

Mark clearly states he got his stats from "'average price data' from the BLS". Is that really so hard to understand?

I think that he is pointing out that the price at Costco has not fallen by that much. While I live in a different country my prices have not fallen as Mark suggests. Now it is possible that some seasonal effects are not captured and there are a few prices that are cheaper today than a year ago but that is not indicative of anything other than a slight change in the growing season that provides us with cheaper produce. I also suspect that we will see a huge drop in meat prices as herds are sold for butchering because ranchers can't afford the increased feed prices. Those declines will be shown clearly while the subsequent increases will be adjusted away by geometric weighting and other techniques.

 
At 7/23/2012 1:34 AM, Blogger PeakTrader said...

It seems, some people don't realize prices rise and fall (e.g. food prices). When they rise, consumers buy less. When they fall, consumers buy more (and stock-up).

Also, many prices are stable, e.g. my monthly payments for housing, auto & auto insurance, health insurance & copayments, cell phone, internet, etc., and they've remained stable for years.

Of course, some prices have been falling for years, e.g. electronics and clothing, while natural gas prices fell and oil prices rose.

Where I've seen the most inflation is in my income, which is much higher compared to a few years ago.

 
At 7/23/2012 8:12 AM, Blogger VangelV said...

It seems, some people don't realize prices rise and fall (e.g. food prices). When they rise, consumers buy less. When they fall, consumers buy more (and stock-up).

This is true but when other prices rise and fall individuals do the opposite. When stocks, houses, gold, etc., go up people buy more. When they fall they sell or buy a lot less. On a national scale we see that with currencies. Once a currency begins a slide it likely dies in its present form while other currencies strengthen against it.

Also, many prices are stable, e.g. my monthly payments for housing, auto & auto insurance, health insurance & copayments, cell phone, internet, etc., and they've remained stable for years.

I would not say that is true. Many people no longer make payments on the houses in which they live. I would say that people spend a lot more on TV, internet, cell phone fees, etc., than before even as prices declined because they use so much more than before.

 
At 7/23/2012 8:15 AM, Blogger VangelV said...

Where I've seen the most inflation is in my income, which is much higher compared to a few years ago.

Good for you. But your experience is not the norm. In the past few years unemployment, if you count the underemployed and those giving up looking, has moved well over 20%. Food stamp programs cover more and more families. These are not the signs of a healthy economy.

 
At 7/23/2012 8:46 AM, Blogger The Drill SGT said...

What is never captured in those inflation/deflatipon numbers is that the quality of many of thse items improves as well. Not only did the price of the TV drop, but it had more features than the high end brand of a couple of years earlier.

 
At 7/23/2012 9:59 AM, Blogger bart said...

lakrinista said:
Again sorry that you feel that the only way to respond to a reader with a question is to insult them,, or maybe I am the first one you have done this to.


You're far from the first to be attached or trolled.

 
At 7/23/2012 10:04 AM, Blogger bart said...

The Drill SGT said...

What is never captured in those inflation/deflatipon numbers is that the quality of many of thse items improves as well. Not only did the price of the TV drop, but it had more features than the high end brand of a couple of years earlier.




What is never captured in those inflation/deflatipon numbers is that the quality of many of thse items *has gone way down* as well.

Not only did the price of the airline ticket go up but the seat is smaller, the leg room is less, the lines are longer, and the free snacks are smaller or non existent from a couple of years earlier.

And the airline example is far from the only one. Compare the price of decent solid walnut furniture of x years ago with the same items today, and you'll see what real inflation has been.

 
At 7/23/2012 10:06 AM, Blogger bart said...

VangelV said...

In the past few years unemployment, if you count the underemployed and those giving up looking, has moved well over 20%. Food stamp programs cover more and more families. These are not the signs of a healthy economy.



U3, U6 & U7b unemployment since 2006


Food stamp program (SNAP) since 1970

 
At 7/23/2012 10:11 AM, Blogger George M said...

Let's see: Bacon is still double what it was two years ago; last year butter was 1.99/lb, now it's 2.39/lb, for St Patrick's Day cabbage was 7 cents/lb last year, 27-39 cents/lb this year; increases for FIOS has more than offset the price savings of new TV. Except for TVs and a very few other items, everything at Walmart costs more!

As Ronnie used to say: "Trust but verify!" Betcha the professor can't find these price reductions where his wife shops.

 
At 7/23/2012 10:12 AM, Blogger bart said...

Food price trends, per the UN food price indexes, are quite clear since about 2006


It's not different this time.

The hard asset (as opposed to paper assets) cycle is alive and well.




The complete food price index from the BLS is up an average of 3.8% for the last 10 months (ending June 1), and it does not reflect *any* of the recent increases.

 
At 7/23/2012 12:37 PM, Blogger VangelV said...

What is never captured in those inflation/deflatipon numbers is that the quality of many of thse items *has gone way down* as well.

Correct. If you own a car it is supposed to be much better than the older models. But if you bump your car into one of those older models at 5 mph you find that the other car doesn't have a scratch on it while yours requires a $2,000 bumper replacement job.

 
At 7/23/2012 3:22 PM, Blogger t11s said...

But education is up about 10% per year. And that's a big ticket item

What students actually pay for college (as opposed to "sticker price") has recently gone down

 
At 7/23/2012 3:42 PM, Blogger bart said...

What students actually pay for college (as opposed to "sticker price") has recently gone down


I wonder if Dr. Perry would agree.

 
At 7/24/2012 7:28 AM, Blogger marmico said...

But education is up about 10% per year. And that's a big ticket item

Tuition has risen at twice the rate of inflation at public institutions because the student who is billed for the net tuition (tuition net of scholarships, grants, bursaries) has seen their share of the costs of post secondary education go from 23.2% in 1986 to 43.3% in 2011.

SHEEO, Table 2

 
At 7/24/2012 12:43 PM, Blogger Kevin Carter said...

However BLS obtains their data, it is contrary to my personal shopping experience as literally every food item on that list has gone up, not down, since last year.

 
At 7/25/2012 8:27 AM, Blogger C/N/N said...

I appreciate the sources, but they do not support not my shopping experience! Also, these data conveniently ignore rising real estate taxes, rising maintenance on apartments and rising health care costs - all of which are bigger than the basket being reported.

 

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