Blogpost 900: Lumpy inflation

Daniel Gross has written an interesting article on The rising cost of living well on Slate.com.In the article Gross talks about how various factors are hitting goods and services that are symptomatic of mass affluence.

Rising oil prices and sluggish wage rises have affected consumers ability to spend on pursuing their passions.

Gross cites various services including Starbucks and organic as examples of this decline and an analyst at Merrill Lynch to looked at the inflation of luxury goods and services.

These services have a rate of inflation that is double the normal basket of goods used to measure rising prices. The flipside is that the common man will be feeling the pressure of inflation much less than his better-off peers, hence inflation occurs at different rates for different people.

The well off are reigning their expenses in, on the small things in life, but when is this going to impact on luxury consumer goods like plasma screen televisions, home cinema systems, video iPods and tablet PCs?

A similar decline in consumerism caused long-term deflation in Japan during the 1990s.