10 Things Falling In Price & What It Means For Inflation

Food prices are rising, as are petrol, gas and electricity. So is there anything (other than houses) that has fallen in price recently?

The Times lists 10 inflation busters – items which have fallen in price this year, along with examples of the savings that can be made with each:

  1. Mobile Phones: down 51%
  2. Digital Cameras: down 50%
  3. Flat screen TVs: down 40%
  4. Home Cinema: down 36%
  5. Apple MP3 Players: down 35%
  6. DVD Players: down 33%
  7. Fridges: down 30%
  8. Camcorders: down 21%
  9. Washing machines: down 18%
  10. Dishwashers: down 10%

What do you notice about all of these things? Yep, pretty much all of them are luxuries or “discretionary items”, and faced with the rising prices of everything else, along with the current economic uncertainties, these purchases are likely to be low on our lists of priorities. They’re also things that you would expect to get cheaper as new models come out, and technology advances.

There are some interesting comments on the article, including this from Adrian:

The government and BoE use electrical items to try and fool us into thinking inflation is lower that it is. That way we don’t have to get pay increases in line with TRUE inflation. Increase in Money Supply = Inflation. Not the price of some rubbish mobile phone or DVD player. The BoE claim to have the goal of fighting inflation, yet then offer to print billions more £’s to bail out banks. Surely by keep interest rates low and increasing money supply they are infact creating inflation and are infact the problem.

Whilst I don’t necessarily think it is something that is done to fool us, including these sorts of items in the inflation figures certainly distorts the true increase in the cost of living.

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