Thursday 23 February 2017

Don't worry about deflation, just enjoy the fall in prices while it lasts

This morning, at 11 o'clock, it is very likely to be revealed that the price of a basket of consumer goods last month was lower than in March of last year. If the State's statisticians confirm that prices are falling, it will be in keeping with a trend in evidence since December, when a period of "negative" inflation began.

By the standards of the past 80 years or so, any decline in consumer prices is a rare occurrence. Rarer still is the fact that prices are lower today than they were seven years ago, just as the economy began imploding. One has to go back to the dark 1930s to find such a protracted period of "deflation".

Despite plenty of hand-wringing about the downsides of falling prices among economists, recent inflationary trends have been good for nearly everyone. They have been bad for almost nobody.

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