Reference no: EM133512425

Case Study: Overall inflation rates for US consumer prices have declined sharply in the past year, and the last estimate was about 3.5% on an annual basis. While much of the credit is assigned to higher interest rate that have slowed the economy, economists also point to improvements in the supply chain, fewer imbalances in the labor market, and declines in the money supply. However, Federal Reserve officials remain concerned about inflation, and they recently raised interest rates to further slow consumer inflation.

Based on past bouts of inflation, the Fed officials know that some price adjustments can take a long time to work through the economy, so they are acting in a very cautious fashion. Part of this slow adjustment arises because some prices are set by contract and are only adjusted once or a few times per year. For example, my son recently received notice that his renewed apartment lease in Chicago will see 10% higher rent for the coming year, and the reported average increase for downtown Chicago is 12-15%. Also, our house insurance is renewed every August, and the new rate will be 15% higher than last year. According to our insurance agent, all of the major insurance companies are raising premiums due to higher than normal claims for storm damage and other losses, and the new policy premiums have increased by as much as 120% over last year.

Question: Can you think of other goods or services that have prices that tend to be "sticky" and slow to adjust? Have you noticed any recent increases for prices that change infrequently? Have you noticed recent price increases for other types of products?