This article in The Economic Voice echoes what I've been saying for quite some time: the inflation issue is subject to market segmentation. Basics are costing more, luxuries are being sold at a discount. Though I suspect that luxuries of the very rich are another segment altogether.
Similarly, housing is segmented: the cost of basic stock in average income areas will, I think, decline in real terms, but the nicest property in the wealthiest areas may hold up OK. We're like different species in the sea, each with its optimum depth-habitat and ecosystem.
Good observation, and accurate. A friend whose business sells and installs very high-end toys for high-end wealthy clients is seeing his business grow dramatically.
ReplyDeleteI'm happy for him, a good man with a great family around him.
But the gap is growing...staples are increasing, small luxuries are discounting.
In a recession
ReplyDeletedemand for lower cost items increases (driving up prices)
demand for higher cost items decreases (driving down prices)
A rather telling recession stat.
Since we taxpayers bailed out the rent-seeking classes it's not surprising they're doing rather well.
OS, thanks for the corroboration.
ReplyDeleteACO - I think the cost of lower priced items is also going up because of the pound's weakness, which you laconically identified here on 7 Oct 2007:
http://theylaughedatnoah.blogspot.com/2007/10/which-will-fall-faster-pound-or-dollar.html