Consumer prices rose a lower than expected 7.7% in October compared to the same month a year ago, according to the Bureau of Labor Statistics recent consumer price index report. In the immediate previous months, that figure had been between 8% and 9%. The 7.7% figure was not uniform across all products and services. As a matter of fact, some prices fell, with the price of smartphones plunging.
Inflation has been the greatest enemy of the economy for the past year. It has resulted in a much higher cost of living for many Americans. Increases in gas and food prices have lowered discretionary spending. For the most part, wage increases have not kept track with inflation. (These are the states where inflation is causing the most stress.)
Another byproduct of rising prices is the Federal Reserve’s response in order to tame prices. The Fed has raised rates throughout the entire year. Its target for inflation is 2%, a small fraction of what it is today. The Fed’s rate increases have been passed to mortgage rates, car loans, and business lending, increasing the cost of borrowing. The theory is that increasing interest rates would slow the economy.
As businesses face a higher cost of capital, however, layoffs are often the result. Rising unemployment also tends to drive inflation down. As fewer people work, people’s household spending ability is undermined, leading to lower demand and eventually lower prices. (These are 36 jobs with wages rising faster than inflation.)
To determine the household items that have declined in price, 24/7 Wall St. reviewed the BLS’ Consumer Price Index Summary October report. Prices are compared to October 2021. Only 13 items recorded an annual price drop in October.
Among the few items with falling prices are several consumer electronics products. Smartphone prices plunged 23% last month. Telephones and calculators dropped 16%. Television prices fell nearly as much. It is unclear why the prices of these items have fallen. Certainly the competition for 5G subscribers among AT&T, T-Mobile, and Verizon has caused something of a price war for smartphones
Perhaps, if prices across the economy start to fall, the number of items that are dropping in price will jump.
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