Don't worry, some consumer prices are still soaring!
Economists worry about deflation – a persistent, broad decline in consumer prices that sometimes accompanies severe recessions.
Deflation can lead to lower wages and other income, which makes it difficult to handle debt. Deflation can also accelerate a recession because consumers postpone buying, knowing prices will be lower next month.
But fear not. A trip through the statistics shows that some costs continued to rise in December even as the overall consumer price index plunged. A few industries are still minting money. They tend to be – this is no coincidence – semi-monopolies or protected by regulation.
Leading the fight against deflation is sugar. Helped by barriers against sugar imports, U.S. sugar prices rose by 1.2 percent in December – a 15 percent annual rate.
Oil and natural gas plunged. Beef and chicken fell. Even milk dipped in December. But sugar kept cooking, contributing to an increase in baked-good prices.
For some reason beer prices rose just us fast. Maybe beer demand is up as people forsake expensive tipples. Drug prices and doctor fees rose. So did car insurance, funerals, college textbooks and cigarettes.
And – you knew this was coming! – cable and satellite TV prices rose at an annual rate of 3.7 percent.