6/29/08 - The Tampa Tribune
Rising Prices? Not For Eyeliner, Zucchini by Newhouse News Service
Everything costs more these days, right?
Despite what you hear on the news about expensive fuel and food, the prices of some consumer items - from women's clothing to electronics - are dropping faster than you can say disinflation. And a week ago, the Consumer Price Index - the yardstick for what people pay for things - showed prices are moderating, as long you exclude the big two.
"Outside of food and energy, inflation is not a problem," said Bruce Mizrach, an associate professor of economics at Rutgers University.
Sure, gas prices jumped 5.7 percent last month, but clothing costs fell 0.3 percent and car prices were basically flat. If the trend continues, it could affect everything from what the Federal Reserve does in the months to come, to how consumers feel about the economy, to the November election.
But as usual, the economic picture is far from clear. Another recent government report showed prices manufacturers pay for raw materials soared 16 percent compared with a year ago. That could mean higher inflation down the road.
In the meantime, it's time to buy stuff while it's still cheap, thanks to good weather, inexpensive microchips and the supreme law of the land: supply and demand.
Some products that have dropped in cost are minor purchases, such as cosmetics and zucchini, and others are more substantial, such as SUVs.
In electronics, digital cameras, cell phones, LCD TVs and GPS units are falling in price. The average cost of a basic digital camera dropped $28 in the past year to $178, according to NPD Group, a Port Washington, N.Y., consumer research firm.
Consumers can buy a 32-inch LCD TV for between $599 and $629, down from about $699 a year ago, said Rey Roque, vice president of marketing at Westinghouse Digital Electronics.
"You have more LCD glass production coming on line, and those modules are the most expensive component of a TV," he said. "We believe larger-sized panel TVs, 42 inches and up, will drop more in percentage terms by the fourth quarter." GPS units are down in price because components are cheaper, said David Leis, chief marketing officer for NovaTracker of Cranford, N.J., which sells GPS systems for commercial customers to track cars, trucks and limousines.
Consumer GPS units have dropped about 10 percent to 20 percent in the past year, Leis said. "Five years ago, it would cost about $800 for a GPS device. Now, you can buy it for $200 to $500."
The reason is microchips and other components are less costly. "You used to need five chips to do a job, and now you only need three," he said. "You are getting a lot more power and more savings because there are higher volumes of them."
Cell phones that can handle e-mail and other data also are cheaper than a year ago, as the cost of electronic components comes down.
Some customers are getting thousands of dollars less for their gas-guzzling sport utility vehicles when they trade them in, which represents a potential bargain for used-car shoppers, said Jim Taylor, general manager for the Cadillac brand for General Motors.
"If you really need an SUV, why buy a new one when you can get a used one" for substantially less, he said.
A 2006 Ford Expedition XLT is selling for roughly $20,000 this year, said James Bell, publisher and editor of Intelli Choice.com, a California-based Web site that analyzes automotive pricing. "So, it dropped more than 50 percent in just 18 months," he said.
The prices of eyeliner and lipliner are sliding at drug store chains, said Risi-Leanne Baranja, editor-in-chief of palacinka.com, a Web site that reviews beauty products.
Many lip and eyeliner products are down 10 percent to 15 percent in price this year, and some liners cost just $1, Baranja said. "They are going down in price because mass merchandisers are focusing on cosmetics with color," she said. "Eye pencils are not a high-cost item because the pigment is cheap to buy. A lot of them are made in Germany."
Cosmetics companies try to keep basic beauty items cheap, or they package them with more expensive products, she said.
The cost of produce can fluctuate because of weather-related issues. Take zucchini, for example, which is grown in Georgia, North Carolina and Florida.
"Zucchini is doing really well because of good weather conditions," said shopping expert Karen Hoxmeier of My BargainBuddy.com, a consumer Web site based in Murrieta, Calif. "Those states had a mild winter, so supply is up."
Prices of zucchini are down about 38 percent, Hoxmeier said.
Women's apparel also is seeing prices fall.
"Apparel is one of the few categories in the federal Consumer Price Index in which overall prices have declined," Hoxmeier said. "Stats show a decrease by about 10 percent since 1998."
Apparel prices have dipped as manufacturing moves to countries with cheap labor, such as Vietnam, and because of increased competition among retailers, she said.
Women's capri pants in discount stores have dropped about 32 percent in price because they are starting to go out of style on the West Coast, Hoxmeier said. "Skinny jeans are replacing them."