"We know that when there's a decline in demand like we've had across the country, well across the globe, that's downward pressure on prices."
Governments./// it might sound like a good thing.
The prices on some of the items you buy are going down.
But some economists warn falling prices are just another symptom of an economy struggling to stay afloat.
Kimt news three's nick kruszalnicki breaks down what this all means.
He joins us live in mason city, nick?
George and katie?
The consumer price index dropped almost a full percentage point in the month of april to zero point eight percent.
To put that into perpective, this $20 dollar tee shirt would have dropped in price by about 16 cents in the span of a month.
While that doesn't sound like much, an economist tells me it's a*big deal for our economy.
"we know that when there's a decline in demand like we've had across the country, well across the globe, that's downward pressure on prices."
It's a lesson in finance.
Rayce hardy teaches economics at riverland community college.
He tells me people who are out of work aren't shopping?
Especially when most stores are still closed.
It's an alarming combination hardy says could lead to deflation... something we've not seen in decades.
"we call it the great depression and the great recession because you haven't heard of them too often.
They aren't around very often and we haven't had any deflation since then."
Hardy describes a spiraling effect when it comes to low prices.
You might decide to hold off on making a purchase because prices could dip.
Inventory sits on shelves causing over supply which only causes prices to continue to plummet.
Then it starts to impact the workers.
"if i'm the employer and i can't lower the wages of my worker instantaneousl y like i can the price of my bananas, i might have the worker come in only 30 hours this week or i might send him home for a week."
It's this economic downturn that worries people like cardiologist avaneesh jakkoju.
Who fears the economy won't rebound quickly.
"the fact that not many people are not working right now they might not be spending as much as they might have.
So how do we stop this downward economic spiral?
Hardy thinks we need to get a handle on the pandemic first?
And then focus on getting people back to work and buying from local businesses again.
Live in mason city, nick kruszalnicki, kimt news 3.
One of the biggest factors for the drop in the price index is the cost of gasoline.
Gas prices were down 20 point six percent last month.
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