Even though economists say consumer prices have fallen slightly, I don’t think the consumer sees that. In fact, I think everything has gotten a lot more expensive for many people even if the actual dollars and cents for an item haven’t changed a bit. That’s because price consists of more than just the $xx.xx, and those other variables are driving up the “price.” Here are some I’ve thought of:
1. Many shoppers have less disposable income – even without a loss in salary, for many taxes are way up – so as a share of their entertainment budget, that DVD costs a lot more now.
2. There are many free or low cost resources that are available and promoted – maybe more than a year ago, such as free movie screenings at the mall, and it is probably more socially appropriate to use those now than pre-recession.
3. Shoppers have more guilt around spending – so the psychic “price” has gone up (”Do I really need to spend money on THIS?”)
4. There’s a shift in what it means to be savvy – everyone wants to feel competent and spending on things that would have been seen as enviable in the 80’s (that Rolex) are seen as foolhardy today – so again, the cost of many things, particularly those related to entertainment or self-indulgence, have just gone up.