12/20/20

Information technology is still the leader of deflation

Eight years ago, I presented the absolute leader of deflation in the US – the consumer price index of information technology, hardware, and software (see Figure 1). It has been falling further since 2012 and now is reaching 7 points relative to 256 points of the headline CPI as Figure 2 demonstrates. Figure 3 depicts inflation for both indices. The information technology price index demonstrates negative inflation from the start.   This inflation approaches the zero line, however. It is important that the index itself will never be negative. it is not excluded that information technology becomes a price setter.  


Figure 1. The evolution of the headline CPI and the index of information technology, hardware, and 
software as presented in 2012.


Figure 2. The evolution of the headline CPI and the index of information technology, hardware, and software since 1988. data between 2012 and 2020 are added

Figure 3. Inflation: Headline CPI and the index of information technology, hardware, and software. The latter is always positive.



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