Good question

Commenter Dick King asks a question that deserves its own post:

More seriously, with bar codes and instantly reprintable memos and internet shopping, is the consumer as aware of inflation as he used to be?

I'm not sure. I noticed the new menu (and the price increase) because they'd taken the opportunity to remove some dishes that we'd always wanted to order, but never had because they were available only in a fasting season that mysteriously never seemed to arrive. But if not for that, I'm not sure I would have realized prices were rising.

Of course, at some level of inflation, even modern printing technology can't keep up; in some hyperinflationary economies, one hears about people trying to spend all their money in the morning, because prices will be higher come afternoon. And in the end, the effect on the consumer's budget will tell; one way or another, the books have to balance. So at best, it's a very temporary respite from inflationary expectations. But still an interesting question.

Comments

depends on how often you buy something... you buy gas a lot, so you notice the price changes more... but when is the last time you bought a tube of toothpaste? You may not recall precisely how much you paid so it's a wash at the consumer level...

Posted by SwissArmyD | January 7, 2008 1:31 PM

It's not a wash for the tens of millions of people who have to track every dollar they spend. It's not barcodes that keep people from noticing rising costs, it's their own wealth.

Posted by mad6798j | January 7, 2008 2:17 PM

so mad6798j, you are saying that you have a book somewhere that indicates how much you spent on a tube of toothpaste 6 months ago? Even in gas prices we may know a trend, but do you remember precisely the last time you saw $2 a gallon? $2.50?

Yes, you can tell when your budget starts to groan under the weight of everything you buy, but do you actually look at specific things? I do know people who do, who don't need to, and people who don't that should.

That still doesn't change so much the idea of timing. If you buy groceries 2x a week, you will notice when your staples go up, because you see it often. Things that you pay more for, but only buy semi-anually, or things that are billed monthly, you may have a far more fuzzy knowledge of.

You may expect that a set of tires costs more than the last time you replaced them, but do you really know how much? Is a washer more expensive now than the last time you bought one? By how much? Do you know specifically how much more it costs to heat your house, when the price fluctuates every month?

I think we know and remember trends, but we always expect everything to be a bit more expensive year on year, because most people have always lived with inflationary pressure, right?

Posted by SwissArmyD | January 7, 2008 2:38 PM

One thing we can do now, that we couldn't do as well before is look at household budgets. While shopping for a new house, I wanted a better handle on expenses. I went on line, brought up my bank records and quickly saw every expense - utilities, gasoline, insurance, groceries etc, for the last 3 years. I didn't notice much inflation, with electric bills being the big exception.

Posted by Njorl | January 7, 2008 3:33 PM

I don't need a book to remember how much I have to allow myself for basic necessities. I actually notice price changes in things that I buy less regularly because it's a sudden new cost that I haven't usually had to shell out for.

Posted by mad6798j | January 7, 2008 3:34 PM

but never had because they were available only in a fasting season that mysteriously never seemed to arrive.

Hmm, wouldn't it be Lent, given the Ethiopian Orthodox (and given when you moved to the area)? The Ethopian Lent is fairly long (fifty-some days) and pretty strict with regards to meat and dairy. I've always assumed that that explains parts of why Ethopian restaurants have lots of good vegetarian dishes as well.

Posted by John Thacker | January 7, 2008 4:27 PM

As someone who experienced high (Brazil in the eighties and nineties) and low inflation (Brazil currently) I can say it gets harder to notice inflation when it is a yearly single digit percent. There's always this feeling that things are getting more expensive, but the comparisons are always against a decade ago. When the inflation was two digits percent or more every month it was clear as water. Maybe it's that way because the situation here is much better than it used to be, so if inflation is low and gets higher perhaps it'll be noticed.

Posted by Daniel Yokomizo | January 7, 2008 11:21 PM