The Wall Street Journal reports that not only is inflation under control, in some areas prices are actually dropping:
Businesses that sell a range of products from IKEA sofas to Air Jordan sneakers have said in recent weeks that they have lowered prices this year. In part, that is because many companies increased prices rapidly in preceding years when supply chain and labor costs rose, and flush consumers were willing to pay more.
This is not really news: the price of durable goods has been going down for more than a year:
Durable goods (like Ikea furniture) today cost 2.9% less than a year ago. Nondurable goods (like Nike sneakers) are down 0.7%.
The flip side is that inflation in services, which is more sensitive to labor costs, is still running at 4.7%. It's continuing to come down, but slowly.
"This is not really news..." C'mon, get real. "Everybody knows" that prices go up, but they don't go down unless we are in a developing depression.
The fact that some prices are going down in a healthy and growing economy is astonishing. Sellers are passing on their savings to consumers, instead of merely reaping extra profits. That's GREAT news. Don't sell it short.
Not the Swedish meatballs, though. They're still $15 a bag. And the restaurant's $1.99 breakfast with free coffee (IKEA family members) is forever gone, I suspect.
The news is that WSJ actually reports this.
The cure for high prices is high prices. Retailers pushed prices until they got resistance from customers, and then they backed off.
For the past twenty-five years, I've parked cars in my yard for college football fans. I charge a ridiculous amount of money to park a car for three hours, but the fans seems to accept that.
The market price of a parking space is a highly dynamic variable and can change several times in the course of several hours before the game starts. The goal, of course, is to maximize income by filling the lot with the highest available purchasers, and the price can change with factors such as the quality of the opposing team, the weather, the traffic, etc. I only have 36 spaces, so I have a limited amount of stock available, and sometimes, there are a limited number of buyers at any price. It is very dynamic, but the sample size is fairly good.
Over the years, the price of a parking space has generally risen with inflation. It doesn't change based on whether the home team is winning or not, because the fans are primarily there to meet their friends, not to celebrate winning.
In the past two years, the price rose considerably because there was little push back. The lot would always fill just before the game started, which means that I'm filtering well for fans willing to pay the highest price.
However, in the past few months, the fans are just not willing to pay as much as they did last year. The home team is winning, the weather is mostly good, but something has changed in regard to what they are willing to pay.
Make of that what you will.
Incidentally, I'm the price-setter in my neighborhood.
Interesting...you should publish an index. 🙂
Given that they have to park their cars somewhere it seems logical to suppose they're finding a cheaper alternative. Alternatives would include staying home.
In the parking business (I ran parking ramps in downtown Minneapolis for seven years), the cheaper alternative is always parking farther from your ultimate destination, and taking some form of transit the rest of the way. The ultimate example is using the park-and-rides way out in the suburbs that are next to light rail stations.
In related news, McDonald's is actually suing several meatpackers, alleging they colluded to fix and raise beef prices over the past several years. https://abcnews.go.com/Business/wireStory/mcdonalds-sues-top-meat-packers-allegedly-colluding-inflate-114611453
No idea if this will go anywhere, but one of the biggest reforms that could happen (needs to happen) in American agriculture is the breakup of the meatpacking industry. It would be great if this lawsuit produced evidence that led the DOJ antitrust division to take some action.
While I generally like IKEA stuff, the thought that they are lumped under "durable goods" gives me a titter.
I understand the impulse, believe me. OTOH I'm currently dealing with shelves and other pieces that have been doing fine for 20 years and have more of their stuff at home that's closer to 30 years old. Not heirloom material unless the heirs are way too easily impressed. But technically "durables" are what's supposed to last 3 years or more.
IKEA has actually been doing radio spots in the Ottawa market, something I don't remember them doing before, and they're strictly focused on price cuts. Done in a really bad Swedish accent, too.