Topic: US Price Deflation in Recent History (Read 2450 times)

deflationary effects of a country's currency has increased the price of the currency exchange rates compared to other countries, while inflation is on the contrary, a country's currency exchange rates decreased compared to other currencies, deflation in a country's history is very favorable population living in that country , our own country has never been a history of deflation, the opposite of our country always be inflation teru constantly ... 

That's pretty clever. I'd guess they get the added bonus of being able to create fake/implied loss leaders while getting high margins on their "normal" set of items by offering only a slight discount relative to the decreased purchase cost on their end, but it all looks discounted to the consumer. Would be fantastic for markets where there's little competition, I'd guess.

On an unrelated note - I went to a local grocer a town over a few weeks ago for their major monthly one-day meat sale. Unfortunately, they decided to include products with the MSRP listed on the packaging. -So on the advertisement, you see this $1.29 bag of chips reduced to $.89. -But then right on the packaging, you have the MSRP of $.69. Broke out laughing when I noticed it, but then I was disappointed because I always liked that there was actually a local grocer there, run by a kindly, old hunchback man, rather than a Walmart. Totally ruined my image of the guy.

Food prices tend to follow the rate of inflation over greater periods of time, however over short periods of time they tend to be very volatile. As a whole they will sometimes drop by small amounts (small enough for most people not to notice, but for it to make a big impact for economists).

Seeing food on sale is a good example of when you will see declining food prices. A grocery store will likely not want to outright lower the "base" price of food items as if they do this then people will complain when the price rises again, so an item that has a lower price will essentially be on sale for a "long term" period of time

How much have taxes increased in that period of time? That's also one of the reasons prices are higher than they would in a truly unhampered market.

I don't disagree. Those are possible factors. I've never noticed food prices decreasing in my lifetime (which I'd assume would happen if prices were subject to a high level of volatility), but I'm sure it's happened at some point. I think it's worth noting again that the 2014 prices came from a regional chain while the 1991 prices came from a specialty, local meat market with two stores. Both sets of prices came from their circulars, and maybe they include less enticing sales on these -- you're probably right on that since the meat market only had one page while Kroger's is seven or eight, though this could also partially be due to Kroger's relatively massive size and selection.

I included all items which were in both circulars to try preventing too much biasing, but obviously, it's a pretty small data set, but maybe it's worth pointing out that few beef or veggie products were included in that, where prices are generally 250%+ higher -- moreover, especially for fruits and vegetables, the time of year doesn't match. Broccoli could be tossed out for that reason.

... A Sam's Club with a digital copy of historical price data would probably be best... I don't suspect they'd be too willing to turn that over.

You need to remember that food and energy prices are the most volatile prices that make up the CPI, and are even stripped out of the "core" CPI as they are generally not considered to be a good measure of inflation.

You also fail to account for the fact that many grocery stores often have many sales that can offer significant savings. I don't see any mention of things being on sale in either comparison (I would suggest that more things would be on sale on the earlier advertisement as printing technology was less efficient in 1991 and would make less sense for a grocery store to advertise items that are not on sale).

If, as a consumer you only buy products that are on sale and in bulk then you would realize much lower rate of food inflation 

It hits me as a cheapskate (the kind with 8 lightbulb sockets in the basement who's first act when buying the house was taking 7 out and replacing the remaining incandescent with a free 15W CFL we received as a company promo). Food's our largest expense if I discount property taxes since I get that back at income tax time. -So it's not just inflation, but what's practically a massive decrease in real earnings. CPI shows long-term stagnation over the years, but CPI is separated from my reality, where we're in a depression which's been going on since I was born. "The strongest economy in the world" would suggest we're only becoming poorer the slowest, which'd be terrible if true.

That is because inflation is exported to exporting countries and any country which use dollar as a reserve currency.

Inflation in the US is nothing when compared to what developing countries face.

Yeah, overcoming inflation is a pain. People usually also tend to forgot about inflation when they consider the amount of a salary raise they may be getting.

lol. I lived in country that had inflation per month 100% not in 25 years.  My parents had to change their salary into DEM (exGerman currency) as soon as they got it, since in a week time they would get much less for it. Luckily this was on for like a year. But there was many years with overall 100% inflation.

Of course you were not able to buy DEM inside bank, or was only some limited number. But there ws dealers stand outside bank that exchanged them to you fast.

I remember where you could buy regular taco (taco bell) for like 19cent. Back then $20 bucks went long ways

Increasing wages?  Only for the 1% in nobamas "recovery."

The increasing wages don't outpace the inflation rate. The normal median households are losing their purchasing power and mean they are getting poorer than before.

They significantly more than double, now, on average. I made an error on ice cream I just fixed (I apparently decided a half-gallon was equal to 48fl oz).  It ends up around 3.4% after that, still pretty close to 72 estimate... possibly closer (though I'd guess further) if I took prices at the store instead of going lazy route and just checking this week's flyer.

So use the rule of 72 (http://en.wikipedia.org/wiki/Rule_of_72) to estimate inflation:  most of the items have doubled since 1991, 23 years ago, so 72/23 = 3.1% inflation a year, sounds about right and not far from the official figure.  You are correct that incomes have not kept up, this is a well-known US / Western world economic phenomena. 

Found an old newspaper within a couple months of when I was born (paper was from May 1st, 1991). Here's the ad from the local SPECIALTY MEAT MARKET:





Here're current comparable prices from the weekly online flier from the local chain:





Coffee WAS $.1279/oz. Coffee IS $.2652/oz.
Price increase since 1991: 107.35%


Milk WAS $1.69/gal. Milk IS $2.69/gal. (unless you live in a state with minimum milk pricing laws like PA where it's crazy - like $3.89/gal)
Price increase since 1991: 59.17%


Cottage cheese (sorry - on a page I didn't scan in - $.99/24oz) WAS $.0413/oz. Cottage cheese IS $.0938/oz.
Price increase since 1991: 127.12%


Ice cream WAS $.028/oz. Ice cream IS $.056/oz.
Price increase since 1991: 100%


Bologna WAS $.0619/oz. Bologna IS $.1429/oz (if you buy 10 freaking packs of gross faux bologna...).
Price increase since 1991: 130.86%


Lunch meat (sliced ham) WAS $.1119/oz. Lunch meat IS $.3333/oz.
Price increase since 1991: 197.86%


Kielbasa WAS $1.99/lb. Kielbasa IS $4.99/lb.
Price increase since 1991: 150.75%


Chicken breast WAS $1.09/lb. Chicken breast IS $2.66/lb.
Price increase since 1991: 144.04%


Paper towel WAS $.69/roll. Paper towel IS $.6238/roll.
Price increase since 1991: -9.59%


Broccoli (1 bunch = 1.5lbs) WAS $.3933/lb. Broccoli IS $.99/lb.
Price increase since 1991: 151.72%






As you can see - though fresh produce, fruits, dairy, and veggies are now priced outside the reach of the working class without food stamps, paper product prices (making the generous assumption that rolls have not decreased in size over time) have dropped. Hooray!

For our small basket of goods, the price increase (keeping in mind I was generous in estimates for 2014 quantities and conservative in estimates for 1991 quantities, and prices came from a specialty meat market while current prices come from Kroger, AND there was no advertisement for beef, which is now ~$3.19/lb) from 1991 to 2014 for groceries and staples has been ~115.93%. Nominally, this means there's been ~5.04% grocery price inflation per year over the 23-year span. -Or, using government math which hides compound inflation, ~3.4%. (for reference, USG claims 2.55% on CPI from '91-'14)

(ETA: fixed ice cream price comparison, h/t thoughtomator -- ETA3: fixed 1991 unit labels)


ETA2:
Nominal median household income in 1991: $28,479
Nominal median household income in 2013 (most recent USG data): $51,939

Median household income increase: 82.38%
Guesstimated grocery bill increase: 115.93%

Grocery price increases have outstripped household income increases by ~40.73%