How real prices rose and fell over the past century

January 17, 2001

Free Market Foundation

The Economist magazine has looked into price fluctuations in the U.S. over the past 100 years and come up with some interesting conclusions. Prices for some products have risen in real terms, while other prices have fallen. The variations are large.

Since 1900, average consumer prices in America have risen 20-fold. But stripping out inflation yields a clearer picture.

Based upon data from a number of sources, here are some of the magazine’s findings:

The cost of a hotel room has risen since 1900 by about 300 percent but a telephone call is 99.9 percent cheaper.

Over the century the real price of a car fell 50 percent.

The price of a Steinway grand piano has increased by 160 percent in real terms but one can have music in one’s home with a compact disc player costing less than 1 percent of today’s Steinway.

On the other hand, the real prices of cigarettes and beers have soared mostly because of government taxes and higher excise duties.

Of course, many products such as refrigerators, air travel, televisions and computers did not exist 100 years ago.

But real prices for such items as wine, clothing, gasoline, eggs, bicycles and salt have fallen over the century. And one would have paid less in real terms in 1900 for theatre tickets, potatoes, pork chops, bread — and the Economist.

Source: The Price of Age, Economist, December 29, 2000.

For more on Prices http://www.ncpa.org/pd/economy/econ8.html