Key Points
- As shoppers await price cuts, retailers like Home Depot say their prices have stabilized and some national consumer brands have paused price increases or announced more modest ones.
- Yet some industry watchers predict deflation for food at home later this year.
- Falling prices could bring new challenges for retailers, such as pressure to drive more volume or look for ways to cover fixed costs, such as higher employee wages.
You’d think it would help consumers consume, but if deflation is too steep and too extended people start rationing as much as they can because they don’t want to look like an idiot for buying that gallon of milk this week instead of next when it’ll cost half as much.
Yes, I’ll skip eating this week to save $50
OR, hear me out, I’ll just spend the money because I’m hungry
Funny way to spell “I didn’t read the comment before I replied” but ok buddy.
No really food is not a good example. People will always need to eat so you’re presenting a scenario where everyone has so much access to food and money that they can choose to forego some of it to enrich themselves. It will take a lot more than that to scare people. The idea that everyone will suddenly turn their backs on this consumer culture we’re living in is not keeping me up at night either.
Traditional economic theory- yes. Hence why deflation can cause such issues.
However, there is also a significant part of consumption that you will make regardless of price, because the alternative is death. (C0 and C1 for anyone who took first year).
The problem is prices grew soo much our entire spending is now limited to essentials (c0), and even if I knew it would be cheaper next week im only getting it because I need it now.
Why would the price of milk drop by half? I’ve seen the price of eggs drop by half, but only after they rapidly jacked it up 6x and the price drop didn’t only take a week to happen. Regardless, if people are not going to be kicking themselves because they could’ve saved $2 if they bought a week later. It’s the collective raising of prices of almost everything altogether that is destructive.