An evaluation of the decline in goods inflation
AbstractOver the past decade, the worldwide average for inflation has plummeted from 30 percent to 4 percent. For many countries, especially those starting out with high inflation rates, falling inflation has been desirable. But the experiences of other countries have raised the question of whether inflation can be too low. In some economies, inflation has dipped to levels that risk disruption of the normal functioning of the economy. ; In the United States, many commentaries on the potential for deflation have noted the sharp contrast between goods and services prices. Excluding food and energy, goods prices as measured by the chain price index for personal consumption expenditures (PCE) dropped 2¼ percent in 2003. Yet nonenergy services prices rose nearly 2½ percent last year. Moreover, goods inflation has fallen sharply over the past decade or so, while services inflation has declined only modestly. In 1993, PCE inflation was about ¾ percent for goods and 3¼ percent for services. ; Clark assesses whether the decline in consumer goods inflation relative to services should be cause for concern in the United States. His analysis focuses on three interrelated questions about the decline in goods inflation relative to services: Was it unusual? What caused it? And is it likely to continue? He concludes that the fall in goods inflation relative to services over the past decade is most likely a temporary phenomenon due to dollar appreciation and, to a lesser extent, increased global competition.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of Kansas City in its journal Economic Review.
Volume (Year): (2004)
Issue (Month): Q II ()
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Gernot Pehnelt, 2007. "Globalisation and Inflation in OECD Countries," Jena Economic Research Papers 2007-055, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Miljkovic, Dragan & Jin, Hyun J. & Paul, Rodney, 2008.
"The role of productivity growth and farmers' income protection policies in the decline of relative farm prices in the United States,"
Journal of Policy Modeling,
Elsevier, vol. 30(5), pages 873-885.
- Miljkovic, Dragan & Jin, Hyun Joung & Paul, Rodney, 2007. "The Role of Productivity Growth and Farmers' Income Protection Policies in the Decline of Relative Farm Prices in the United States," Agribusiness & Applied Economics Report 9368, North Dakota State University, Department of Agribusiness and Applied Economics.
- Ben Hunt, 2007. "U.K. Inflation and Relative Prices Over the Last Decade," IMF Working Papers 07/208, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LDayrit).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.