Tuesday, September 16, 2008

Despite Falling Oil Prices, Inflation Remains


Now that oil prices are tumbling, will consumers see prices fall on other goods? It would seem logical that higher prices related to energy prices would drop when energy prices do. But unfortunately, for many goods and services, that may not be the case.

The bad news is that higher prices may be here to stay. Gas and energy prices, which rose to new highs were responsible for the increase in everything from the price of eggs to meat prices, and those prices may not come down if profits don't return to their previous level.

Many companies raised prices but still saw profit margins decrease. In many cases, companies didn't raise prices until it was do or die on the profit line. Therefore, even when oil prices drop, the new, higher prices on goods may remain.

No comments: