What happened to price inflation?
Sunday, October 21st, 2007Supposedly we are living in a time when there’s a thing called inflation ie prices are going up all the time.
Except that they aren’t. Well, not in many key fields.
OK, we have taken it for granted that computers and other electronic devices will drop in price over time but that price drop isn’t confined to things in those categories. Airline travel is substantially cheaper: in 1978 I flew from the UK to the west coast of Canada for just over £200 ($400) which probably doesn’t sound much now but it was considered as a “once in a lifetime” trip back then yet these days it’s commonplace and easily affordable to go to Florida on holiday.
I was seriously thinking of getting an Encyclopedia Britannica in 1981. It was just over £600 ($1200). The updated version is £650 ie no price change.
It’s the same in many fields of course. Inflation these days seems to be confined to a small range of products where there is some limitation in supply in force. Most obviously houses and land of course but also things where there are price controls such as farm products and indeed oil based products.
In some cases, it’s the case that the inflation rate for a given person or family can be negative ie prices for them reduce each year. This happens most commonly with retired people who have already bought their house thereby removing a major factor in their “personal inflation” and if they walk more rather than use a car or public transport they can easily knock out another key area ie the oil price.
Copyright © 2007-2011 by A Time of Magic. All rights reserved.