It is natural to complain that some prices increase. But don’t forget that prices can also decrease. While there are obvious seasonal fluctuations for some goods (say, agricultural products), other goods have been declining year over year, contributing to a general price inflation that is lower than one may think. The prime example shown here is anything related to information technology. It is no secret that IT devices with a given set of characteristics have continuously fallen in price. Or, to put it differently, a device of the same price year after year will provide much better performance; its price by “unit of performance” must therefore be declining. This graph shows some CPI categories where advances in IT have lead to price decreases. Or at least no price increases. This is not restricted to the IT category, of course. A future blog post will explore more examples on this topic.
How this graph was created: Search for CPI, then add the other series. Because their base years are different, the axis labels get crowded. So, these were removed by unchecking “Axis titles” in the graph settings.
Suggested by Christian Zimmermann.
View on FRED, series used in this post: