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in a year soaring inflation Across the U.S. economy, the opposite has happened in some consumer markets. Prices have fallen.
The biggest declines on a percentage basis were concentrated in categories such as consumer electronics, beef, cars and trucks. consumer price index.
Here are the most contracted commodities in 2022:
Several consumer electronics topped the list. Television; “Other” video goods, excluding television. Computers, peripherals and smart home assistants. Their respective prices fell by 22.2%, 14.4%, 8.6% and 5.8% in 2022.
In general, consumer electronics prices decline over time, as measured by the Consumer Price Index and other inflation indicators. According to CPI, this has been his trend since 2006. data For example, information technology, hardware, and services.
Pandemic times were an exception, as households upgraded and purchased new technology devices during stay-at-home orders. strong demand It contained important parts such as semiconductor chips. short supply.
But consumers may find this widespread deflationary trend strange when prices for popular commodities such as smartphones, TVs and computers do not appear to be falling.
Economists say the driving force behind deflation is measurement quirks rather than a reflection of what consumers pay out of their own pockets.U.S. Bureau of Labor Statistics adjust For example, the price of technology versus quality—microchips, software, and screen resolution improvements—creates the illusion that prices are going down on paper.
In other words, better quality for the same money Deflation in the Eyes of Federal Statisticians.
“We are getting a good return on investment,” said Tim Mahedy, senior economist at KPMG. “You’re still paying $800 for an iPhone, but yours is much better.”
This economic modeling is known as “hedonic quality adjustment”. BLS Usage This method applies, for example, to household appliances, electronics, and apparel items.
The dynamics of this measurement are consistent with weak demand. This is due to consumers no longer having to stay indoors as they did during the pandemic, and supply shortages easing.
“It’s been the same story for the last 20 years,” said Andrew Hunter, senior US economist at Capital Economics, of the general deflationary trend in consumer electronics. “Now it seems to be coming back in the last six months or so.”
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Used cars/trucks, rental cars
Used car dealership in New York on January 19, 2022.
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used car and truck prices Among the first surge The category rose 37.3% that year, according to the Consumer Price Index. This is the largest of all commodities except energy commodities such as gasoline and fuel oil.
now, Used car and truck prices are recedingIt will drop 8.8% in 2022. Only smartphone and TV prices fell at a faster rate.
Car rental and truck prices have followed a similar trajectory. After jumping 36% the year before, he’s down 4.9% in 2022.
A shortage of semiconductor chips, a key automotive component, has halted global production of new vehicles during the pandemic.car stock Collapse to record lowsvehicle prices will soar in 2021.
You are getting bang for your buck. You’re still paying $800 for an iPhone, but your iPhone is much better.
KPMG Senior Economist
short supply pushed more buyers We are entering the used car market and pushing up prices. These buyers included rental car companies that had to replenish the fleet they thinned out early in the pandemic as consumer demand slumped.
Shortages have met head-on with surging demand from US travelers who wanted to travel in 2021 as the Covid vaccine rolled out, but travel outside US borders somewhat constrained.
But now, as supply chains normalize, global car production is rising, economists said. This led to a decline in used car prices.
“Car rental companies used to buy used cars, but now they have stopped buying them entirely,” said Mark Zandy, chief economist at Moody’s Analytics.
higher interest rates Consumer demand is also shrinking.
A Black Angus cow on a ranch in Pleasureville, Kentucky.
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Prices for uncooked beef steaks, beef roasts, other types of beef and veal fell 5.4%, 3.5% and 6.7% respectively last year.
Meanwhile, bacon prices fell 3.7%.
That happened when consumers saw overall food prices moving in the opposite direction, with food prices rising nearly 12% in 2022, according to Consumer Price Index data. rice field.
Amy Smith, vice president at Advanced Economic Solutions, a consulting firm that specializes in food economics, said the trend in beef prices is largely a result of the drought conditions in the United States and the accompanying economics of beef production.
According to the US Department of Agriculture, as of December 6, more than 78% of the United States was experiencing some degree of drought. About 69% of the U.S. cattle herd is in drought-hit areas, up 33% from the previous year, according to the U.S. Department of Agriculture. Said.
This is important because drought shrinks pasture and forage areas. at the same time, Corn and wheat prices are soaringSmith said, supplementing pasture feed with animal feed is expensive.
As a result, many farmers choose to slaughter cattle early for beef production, increasing the supply of available beef and lowering prices at grocery stores, Smith said.
US Department of Agriculture explained Slaughtering of cattle in the first half of 2022 will be done as an “active slaughter”, mainly due to “increased pasture conditions and operating costs.” The pace of beef cattle slaughter in July was the fastest recorded since the USDA began tracking his data in 1986.
Meanwhile, the decline in bacon prices is also partly due to increased domestic supply of pork, while exports to other countries have declined, Smith said.US Department of Agriculture Estimate In 2022, US pork exports will total £6.3bn, down 10% from 2021.