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.

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.

Disclosure: None. 

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