Sunday, November 28, 2004

Inflation: goods vs services

If you break the CPI into components, you can see an interesting divergence in the behavior of goods vs services. The former have exhibited deflation over the last 4 years (exported from China?), while services costs have continued to go up. When will outsourcing become widespread enough to affect the rate of inflation in services? Evidently labor still has some pricing power.

(Graph from BusinessWeek.)

No comments:

Blog Archive