Mapping Price Changes of Goods and Services This Century
March 9, 2023
Inflation has been a hot topic since the pandemic. Pandemic-era stimulus money, supply chain issues, and changing consumer habits have created the conditions for the fastest inflation in more than 40 years, and the Federal Reserve’s efforts to combat it have led to turmoil in the markets. As we continue to track inflation’s progress as it rolls through the economy, it is worth remembering that our current inflationary bout is taking place amid a much larger change in inflationary dynamics over the past two decades.
The chart below shows the diverging paths that inflation for goods and services have taken since the start of the century. Since the advent of globalization, most consumer goods have seen marked disinflation. Meanwhile, prices for “non-tradable” services have skyrocketed. And while you can see a stark acceleration in the prices for many categories after the pandemic, it can be helpful to put the recent tumult in a larger historical context.