The Price of This Essential Item Is Plunging

By Douglas A. McIntyre Published Dec 30, 10:00AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

The Price of This Essential Item Is Plunging — © gilaxia / iStock via Getty Images

The November consumer price index report issued by the Bureau of Labor Statistics showed an overall increase of 6.8% compared to the same month last year – the greatest increase since 1982. This all but shattered the argument that inflation would begin to slow, or that it would be transitory. The surge was due to rises in everyday items, and the cost of fuel. (The price of these household items is soaring.)

One essential item, however, saw its price plunge an astonishing 58.6%: Food at elementary and secondary schools.

Perhaps the most well-regarded voice about the severe damage rising prices can do to the economy is that of Larry Summers, the former secretary of the treasury and director of the National Economic Council. He has argued that new government stimulus packages, which drive up incomes, could also pour gas onto the inflation fire. (These are the countries with the highest inflation rates in the world.)

Summers is joined in this school of thought by billionaire investor Bill Ackman, who used the word “raging” to describe the current rise in prices in an interview with Bloomberg. Ackman believes the government figures understate reality.

Inflation has started to color the public’s view of the economy. The University of Michigan’s consumer sentiment index dropped sharply in November almost entirely due to anxiety about inflation.

The new numbers also indicate that the Federal Reserve faces a daunting challenge. Jerome Powell was just reappointed by President Joe Biden to another term as chairman of the Federal Reserve System’s Board of Governors. This was largely on the strength of the Fed’s work to push a national economic recovery from the COVID-19 driven recession. But can he do just as good a job with inflationary pressures?

The Fed can raise rates in an attempt to tap down rising prices, but higher interest rates could undercut the buying power of many consumers and businesses. Both the stock market and the extremely healthy real estate market could be undermined by a decision to raise rates.

The November consumer price index report indicated a wide range of price increases by category – but also a number of items whose cost dropped. To find the everyday items that showed a 12-month price decrease in November, 24/7 Wall St. reviewed the report.

Click here to see prices of essential items that are plunging

Among the largest drops were food prices at schools and employee sites, each of which was down over 40% year over year. There is no ready explanation for this, other than many businesses and schools were shut down for much of the period covered. Other regularly used items which posted large drops in prices were smartphones and telephone gear.

22. Potatoes
> Price decrease, Nov. 2020 to Nov. 2021: -0.2%

[in-text-ad]

21. College textbooks
> Price decrease, Nov. 2020 to Nov. 2021: -0.2%

[recirclink id=1012450]

20. Cheese and related products
> Price decrease, Nov. 2020 to Nov. 2021: -0.3%

19. Prescription drugs
> Price decrease, Nov. 2020 to Nov. 2021: -0.3%

[in-text-ad-2]

18. Girls’ apparel
> Price decrease, Nov. 2020 to Nov. 2021: -0.4%

17. Wireless telephone services
> Price decrease, Nov. 2020 to Nov. 2021: -0.4%

[in-text-ad]

16. Public transportation
> Price decrease, Nov. 2020 to Nov. 2021: -0.6%

[recirclink id=862989]

15. Tenants’ and household insurance
> Price decrease, Nov. 2020 to Nov. 2021: -1.0%

14. Miscellaneous household products
> Price decrease, Nov. 2020 to Nov. 2021: -1.1%

[in-text-ad-2]

13. Cosmetics, perfume, bath, nail preparations, and implements
> Price decrease, Nov. 2020 to Nov. 2021: -1.2%

12. Video discs and other media
> Price decrease, Nov. 2020 to Nov. 2021: -1.2%

[in-text-ad]

11. Recorded music and music subscriptions
> Price decrease, Nov. 2020 to Nov. 2021: -1.9%

[recirclink id=965981]

10. Computer software and accessories
> Price decrease, Nov. 2020 to Nov. 2021: -2.3%

9. Airline fares
> Price decrease, Nov. 2020 to Nov. 2021: -3.7%

[in-text-ad-2]

8. Health insurance
> Price decrease, Nov. 2020 to Nov. 2021: -3.8%

7. Dishes and flatware
> Price decrease, Nov. 2020 to Nov. 2021: -3.9%

[in-text-ad]

6. Sewing machines, fabric and supplies
> Price decrease, Nov. 2020 to Nov. 2021: -4.8%

[recirclink id=860829]

5. Audio equipment
> Price decrease, Nov. 2020 to Nov. 2021: -5.0%

4. Telephone hardware, calculators, and other consumer information items
> Price decrease, Nov. 2020 to Nov. 2021: -11.5%

[in-text-ad-2]

3. Smartphones
> Price decrease, Nov. 2020 to Nov. 2021: -16%

2. Food at employee sites and schools
> Price decrease, Nov. 2020 to Nov. 2021: -44.9%

[in-text-ad]

1. Food at elementary and secondary schools
> Price decrease, Nov. 2020 to Nov. 2021: -58.6%

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.