this post was submitted on 03 Dec 2025
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Yes and no. In a vacuum it would be nice if goods generally seen as consumer necessities with lower price sensitivity (people need to buy food regardless of price) stayed cheap, but I think the received understanding in mainstream economics is that we can't just lower food prices without also lowering other prices—and that lowering prices across the board is going to be a sign of deflation which will change consumption habits and potentially exacerbate other economic issues.
I'm not defending this view, but just trying to frame that I think the general view of economists is that grocery deflation is probably going to be inevitably linked to other falling prices which, as a whole, is a concern
This is also important in the context of investment. The general understanding is that even if input costs are falling (i.e., land, lumber, labor), why would anybody invest in new housing construction if deflation is going to mean the sale price is lower than the cost? At a macro level deflation means that your money increases in value without taking on any risk so instead of investing in the market or a potential new venture, just hold on to it and it's be more valuable without the change that the stock declines or the venture goes belly up.
The concise framing of this is that "a dollar today is worth more than a dollar in the future" because of inflation so you should invest to, at minimum, keep buying power in real terms constant. But with deflation this is not true so business sees simply hoarding capital as a safer bet than deploying it into things that theoretically create job and drive growth/prosperity since a dollar tomorrow will be more valuable than today.
I appreciate the explanation and acknowledge that it is more nuanced than I wish.
But right now I'm burned out and angry...
What you're saying sounds like lower prices would be good for normal people, but we can't do it because businesses and rich fucks would ruin it for everyone.
Like, I'm not investing in land, lumber, or labor. I just want to eat lettuce.
I totally hear that. And again, not trying to defend this view simply present the convention understanding.
I think to your last point: you may not be directly investing, but if you have a retirement 401(K) or IRA or pension, you are linked into this. And if you don’t have retirement savings or other investments, your employer is making these calculations, or the companies that hire your company, or so on up the chain. Even if you work retail grocery and will be, basically fine in terms of steady employment, deflation/falling prices likely means mass un/underemployment for people in a lot of other industries.
Lower prices may be good for consumers in some ways, but they have knock-on effects that are are generally seen as significantly and negatively outweighing the positive of lower prices.
Sticking with building as an industry likely to see decreased investment, that puts keeps construction workers out of the job. It keeps those employed in trucking, lumber, architects, &c. out of work. Then the construction companies don’t have as much other consumption needs to companies that sell accounting software, project management software, engineering and site planning work contractors lose business and cut employment.
For cheaper lettuce: why would a farmer invest in planting? Between fuel, seed, fertilizer, other equipment, and labor, they’re going to have invest and in a deflationaey environment they might be able to sell their lettuce for less than they invested. Why not just sit on that cash since it’ll be more valuable at the end of the season anyway and avoid the price risk and the risk of crop failure?
It’s worth noting that both the Great Depression and Great Recession saw deflation—with the Depression especially having depressed commodity and wage prices.
I realize I’m going a long way to saying “business is connected” which is…not revolutionary…but there are significant risk if the economy stops investing. This is why centeal banks all target a small level of inflation, such as the 2% target for the Fed: if money doesn’t become less valuable nobody will have any incentive to do anything economically productive.
That, of course, gets to the heart of the infinite growth issue with cancerous capitalism, but there is a theoretically consistent internal logic to it and why, without larger systemic changes, falling prices is worrying under the currently prevailing economic regime.