The latest inflation report from the Bureau of Labor Statistics showed an interesting divergence in the numbers: While the price of the goods we buy has been dropping lately, the price of services has been holding up. Inflation for services was at 2.4 percent in January, while inflation for goods was barely above zero. The reading for January was just 0.1 percent.
Services inflation tends to be much more stable than goods inflation. What we pay for goods is heavily influenced by the world economy, by what we pay for commodities and finished products from around the globe. The cost of services is largely influenced by what we pay people to work for us, and that changes slowly.
But services inflation has been creeping downward in recent years. That figure peaked at 3.4 percent just before the recession, but as unemployment has remained high, the cost of services has fallen alongside it.
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