Inflation, Deflation

A 78% drop in price in 7 years for DVD players. We are so accustomed to price declines like this for common household appliances, computers and electronics, that we take it for granted.

In 1996, I bought a Dell computer when the standard hard disk was 2 GB, and the cost was about $2,000 (about $2500 in today's dollars). I bought a computer last week and the MINIMUM hard disk on a Dell XPS 410 computer is 250 GB, and the computer cost less than $1500. 125 times more disk space for a 40% lower price. This example illustrates why the Bureau of Labor Statistics has difficulty measuring inflation, or deflation in this case. Computer prices have fallen in real dollars, and the quality has increased significantly.