New Yorkers recently experienced a phenomenon unheard of in these parts for more than a half-century: the cost of living actually went down over the course of a year.
From May 2008 to May 2009, the Consumer Price Index dropped 0.1 in Gotham, the first time the city has enjoyed a fall in the cost of living since 1956.
The dip — so small that you probably didn’t even notice it — was the result almost entirely of the drop in gas and oil prices, with energy prices plummeting 25 percent.
Meanwhile, food went up 2.9 percent. and rent popped up 5.3 percent — with another bump likely.
Don’t expect the good times to continue, however, as prices in May were .2 percent higher than in April.
“This may be a one-month anomaly, as gasoline prices are rising again,” Michael Dolfman, regional commissioner of labor statistics, told The New York Times.
(Source: NBC New York)
Join the official YWN WhatsApp status
One Response
Deflation has been occuring world wide. Since New Yorkers tend to consumer gasoline less than most other Americans, the effect hasn’t been as pronounced.
Deflation is the absolute worst thing that can happen to an economy. While prices and wages fall, debts remain unaffected. Therefore the real value of debts increase, while the ability to pay them decreases. This causes consumer to (justifiably) panic and stop consuming, causing more deflation. Perhaps you have notices the prices for homes are falling, and many interest rates are close to zero, and that governments revenue based on income and sales taxes are declining rapidly.
When the threat of this became evident last fall the Bush administration started policies, followed by the Obama administration, of printing oodles and oodles of money (which if done improperly, can cause hyperinflation which is almost as bad as deflation, but at least can be survived by indexing and adjusting interest rates).