Tags: prices | oil | Christmas | vehicles

The Fiscal Times: Look For Some Diminishing Price Tags in 2014

By    |   Tuesday, 17 December 2013 12:04 PM

The Fiscal Times got out its crystal ball, and came up with a list of things that may cost less in 2014 than they do now. Hint: none of them will be found in an after-Christmas bargain bin.

The Times noted the Consumer Price Index is expected to rise about 3 percent next year, according to economists, which would be higher than this year’s 1 percent, but still reasonable by historical standards. It probably will not add much to pricing power for marketers.

One big item picked to decline in price that affects nearly everyone is oil. Government forecasters expect both crude oil and gasoline prices will sag next year. The reason: “The continued domestic oil boom is increasing the U.S. oil supply even as demand declines due to greater fuel efficiency, a move away from oil heat, and a shift to natural gas,” the Times said.

One key investment class expected to take a tumble in 2014 is bonds. That could mean losses for investors who think their money is safe in funds that hold bonds.

The Federal Reserve is widely expected to start throttling back on its massive monthly bond purchases, which should reduce demand and put pressure on bond prices.

“That doesn’t matter for folks who own individual bonds and plan to hold them to maturity, but weak prices will hurt the value of bond funds,” the Times said. “Switching from intermediate- to short-term bond funds will shield you from interest rate hikes but will also bring a lower yield.”

The Times predicts Apple will feel some pressure on its top-shelf pricing for its iPads.

“Cheap Android tablets are continuing to flood the market, and they’re starting to make some headway in terms of market share, pushing prices down across the board. Companies like Acer and Lenovo have introduced tablets priced below $150.”

The prices of used cars and coffee will also fall in 2014, according to the Times, in both cases because supply is expected to outweigh demand.

The U.S. Department of Labor reported Tuesday that the CPI was nearly flat in November, in part because of falling gasoline prices, which could give the Fed reason to continue its asset purchases for a while longer.

“High unemployment and small wage increases have kept consumers from ramping up spending, making it difficult for businesses to raise prices since the Great Recession ended,” the Associated Press reported.

The AP said the November decline in energy costs was offset by higher costs for home rentals, hotels, airfare and restaurant meals. Grocery prices crept up 0.1 percent, but prices for new vehicles and clothing fell.

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The Fiscal Times got out its crystal ball, and came up with a list of things that may cost less in 2014 than they do now. Hint: none of them will be found in an after-Christmas bargain bin.
prices,oil,Christmas,vehicles
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2013-04-17
Tuesday, 17 December 2013 12:04 PM
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