Consumer electronics prices are in broad decline

This holiday season is promising to be a very good one… to those of you who still have jobs that is. Yes, I know it sounds sad but still the facts are stubborn things. A wide range of consumer electronics products have hit record low prices according to this Wall Street Journal report. The article lists popular product categories such as HDTV’s , laptops, camcorders and DVD players - all showing significant price declines. The trend seems to be very widespread.

While prices on consumer electronics typically drop over time, the breadth of key price barriers that are being broken across so many segments is unusual. “The price declines we’re seeing this year are steeper than normal in many more different categories,” said Steve Koenig, an analyst at the Consumer Electronics Association, which calculated that consumer-electronics prices fell 7.7% overall in the first half of the year compared with a 1.9% price increase a year earlier.

Another interesting conclusion made by the author is that the “consumers shouldn’t expect gadget prices to fall much further over the holiday season” which I tend to agree with. As the economy slowly recovers the demand will pick back up and will drive the prices. Another factor to consider is the falling US dollar. Since most of these products are made overseas and imported into the country, weak dollar automatically means higher prices.

Earlier this month I made my investment picks for this year’s IRS contributions and I am heavily betting on inflation (here the distribution: 50% DBC, 30% FE, and 20% AAPL). As for this year’s shopping, all our budget went towards saving money for my daughter’s field trip to Cost Rica in the spring of 2010 so we will probably have to go away with a CRT TV in our living room for another year.

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