Costco finds inflation is at zero; deflation looms.

[Tomconroy]

Link to tweet

[Ferrets are Cool]

1. My interpretation of this is as follows...Corporate America has raised prices up to the point

where average Americans will still complain, but not stop buying. They are NOT reducing prices. A box of oatmeal that cost $2.98 in 2020 now costs $5.98. While I am happy that prices have stablized, these inflated prices are nothing to celebrate.

[RobinA]

2. Call Me

when the deflation starts. It's still up, up, up where I live.

[ret5hd]

4. you do NOT want deflation.

in many ways worse than inflation.

[Tomconroy]

7. Only If sustained for a long period of time.

[ret5hd]

8. once started, deflation is much harder...

almost impossible, to reverse.

[Tomconroy]

9. DU can even find a dark side to lower prices. LOL.

Don't worry. Be happy.

[Zeitghost]

11. I'm not too worried about deflation happening

But sustained deflation is catastrophic to an economy and makes the rising prices of inflation look great as an alternative.

[Tomconroy]

6. In the process of hitting used and now new cars,

[andym]

3. Lower fuel costs and the end of supply chain shortages should result in deflation on some items

that inflated much more than the overall inflation rate since 2021. Higher fuel prices associated with the beginning of the Ukraine war prevented that from happening earlier, and it takes some fuel prices some time to percolate through the production and transportation chains.

[ProfessorGAC]

14. One Of My Pet Peeves

The supply chain issues were virtually gone by the 2nd quarter of 2022.
In fact, transportation volume of goods went STEEPLY UP from Q3 2021 through Q2 2022.
Remember, that nearly 85% of the base economic activity did not go down at all, even during the peak of COVID.
Supply chain disruptions were a convenient excuse to raise prices long after supply rebounded to meet & exceed demand.
The fact that inflation spiked due to pent-up demand is a clear indicator that the supply was there. These goods weren't more expensive due to true scarcity.
I agree with you in principle, but the "supply chain issues" didn't last anywhere close to as long as the financial pages would have us believe.
Plus, fuel prices greatly contributed to the inflation and any supply issues were intentionally manipulated when big petroleum producers slowed down output.

[Johnny2X2X]

5. Wage growth

So wage growth has exceeded inflation for several months now. But even when inflation was 8%+, wage growth was really high then and blunted much of inflation. If you're making 6% more than last year, but everything costs 8%, yes, it's not a good situation, but it's not like if you were making the same.

Grocery prices over the last 12 mponths are up 1.7% while wagess over that time are up 4.1%, groceries are therefore more affordable now than a year ago.

[MichMan]

10. Wage growth isn't like an automatic COLA increase

Some people got wage increases that were well above inflation. others got much less.

[uponit7771]

12. CPI isn't back to 2% inflation from 2019 to now, even if inflation "rate" goes to .00001 the CPI

... Isn't guaranteed to fall

Housing prices are are 1/3rd of CPI and are too stupid because too many large investors bought up inventory since 2020 and stopped in 2022. Now builders and large investors hold on to inventory with high prices keeping housing prices at the least affordable in US history.

[cally]

13. In economics, I learned deflation could be very bad

But I did some searches after reading the above thread. A few said it can be worse than inflation but it depends on why deflation is happening and how long it lasts. See linked article

I also found this encouraging from investopedia

KEY TAKEAWAYS
Deflation is when the general price levels in a country are falling—as opposed to inflation when prices rise.
Deflation can be caused by an increase in productivity, a decrease in overall demand, or a decrease in the volume of credit in the economy.
Most of the time, deflation is unambiguously a positive trend for the economy, but it can also under certain conditions occur along with a contraction in the economy.
In an economy dominated by debt-fueled asset price bubbles, deflation can lead to a temporary financial crisis and a period of liquidation of speculative investment known as debt deflation.
https://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp