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March 27, 2008

Some things (but not gas) are getting cheaper

Silver lining department: Gas is $3.20 a gallon. Milk is $4. Electricity has nearly doubled in recent years.

Is everything getting more expensive? No. Although inflation appears to be back in a big way, there are still significant deflationary forces in some parts of the economy. As long as overseas wages are lower than in the United States, as long as technology keeps improving electronic devices, and as long as open trade allows access to world markets, many prices will fail to keep up with those for food and energy.

A quick tour of the government’s price data shows numerous items failing to match February’s overall inflation rate of 4 percent.

Televisions continue to lead the deflation parade, plunging 19 percent in price from February 2007 to February 2008. Camera prices fell 13 percent. Watch prices fell 4 percent. Also in the technology category, cell-phone service was 1 percent less expensive in February than a year before.

The other deflationary nexus is clothing and household goods. On the whole apparel prices fell 1 percent. Women’s clothing, which had been getting costlier a year ago, fell 4 percent. Carpeting, bedroom furniture and tools all fell slightly. Dishes and flatware have been getting cheaper for years and rose less than one percent in February compared with February 2007.

True, you can’t eat rugs. TV won’t fuel your car. But your dollar goes a little farther at Best Buy and Sears than at Exxon.

Posted by Jay Hancock at 7:12 PM | | Comments (0)
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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