Things Don't Cost What They Used To: 10 Major Price Shifts in 2010


With 2010 coming to a close, it's interesting to check out just how much more it costs to buy common goods and assets compared to the beginning of the year. We hear conflicting stories about the Fed printing money, which should lead to inflation, contrasted with two straight years of no cost-of-living increases for Social Security. While the "official" inflation gauges seem to indicate we have very little inflation in the system, take a look at these everyday items and form your own conclusions:

Oil: Up 25%

The rise in oil prices has been the sleeper inflation story of the year. With Americans practically shrugging off oil under $100 when we saw a superspike over $140 just a few years back, oil has been steadily rising all year without much fanfare.

Gasoline: Up 24%

The big move in oil prices this year carried through into gasoline prices. While there's more involved here, from refining capacity to varying state taxes, for 2010, gasoline prices roughly kept pace with oil. We're only at $3 gas now compared to the $4 gas nightmare still burned into our psyche.

Corn: Up 53%

Corn is just one of the "soft commodities" that saw a spike in 2010. 

Sugar: Up 29%

Another key staple, we saw a rise in sugar prices over the year, especially as of late.

Cotton: Up 109%

There was a huge move in cotton this year, which should certainly be showing up in clothing prices in 2011 if this doesn't subside.

Coffee (Arabica): Up 64%

Coffee is hot. Consumption is increasing virtually everywhere as emerging markets form a new middle class and switch over from tea.  Just when you thought a town or city couldn't sustain another coffee shop, another one pops up — kind of like banks and pharmacies. Have you ever calculated how much you spend on coffee each year? Scary!

Lumber: Up 47%

It's not like we're building a ton of houses this year, but we've seen lumber spike significantly.

Gold: Up 26%

Gold was the story of 2010. From late-night infomercials to new ATM machines spitting out gold coins, consumers were bombarded with commercials and "experts" telling us we should buy gold now (check out this Cash-4-Gold expose for instance).

Silver: Up 73%

What many people didn't catch on to until later in the year was the silver story (poor man's gold). For various reasons, silver is more volatile than gold and this year, we saw silver almost double.

Euro: Down 9%

One of the few positive stories for Americans was the decline in the Euro. This makes it that much cheaper to travel to Europe in 2011, as well as to import European goods. This is primarily due to Europe's folly, not a robust U.S. Dollar though. The bailouts of Greece and Ireland, with rumors that Portugal and Spain are soon to follow, have set off jitters in the currency markets, making the U.S. Dollar look a little less risky.

So, while there's talk of deflation and Ben Bernanke told us on 60 Minutes that he's 100% confident he can control inflation, chances are you are a routine consumer of at least some of the items on the list you feel like things are getting cheaper? I don't. There are tons of different commodity ETFs to trade or hedge costs in many of these assets, but that may be best left to the pros unless you're actually in the business of purchasing these items — or you have a serious coffee addiction!

Don't you feel like life is getting more expensive?

Sources: Financial Times , Bloomberg

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Guest's picture

Absolutely higher. Last year I was able to purchase eggs for 99 cents a dozen for Christmas baking. This year it went "down " to $1.59. Fo some reason bananas are still pretty good, locally grown apples and pumpkins are at 89 to 59 cents a pound respectively, not too shabby. But don't even mention tuna.....

Darwins Money's picture

I'm just amazed that the government refuses to concede there's structural deflation. It's like "nothing to see here, move along". These numbers are shocking.

Guest's picture

But don't even mention tuna.....

+1 =____=

Guest's picture

I'm just amazed that the government refuses to concede there's structural deflation. It's like "nothing to see here, move along". These numbers are shocking.