No joke here. Lower prices for consumers could be just the spark to set the economy on fire. The Consumer Price Index (CPI) had good news for shoppers in October, with prices declining .1 percent. It is the first time since June that this has happened which seemed to trigger more sales as well. The CPI tracks the cost of various goods, including food, gas, and cars. Some categories happened to fall more than others. As long as inflation is kept in check, and deflation is not a factor, lower prices can help spur the economic recovery by giving consumers a reason to spend. With a decrease in prices comes an increase in consumer demand, which is very welcome news to retailers trying to increase holiday sales figures.

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Gas and Automobiles

Lately, the biggest impact on consumers has been the cost of gasoline. Luckily, the price dropped enough in October to free up $363 million that shoppers could spend elsewhere. Overall, prices at the pump fell 3.1 percent. When gas prices drop this echoes in plenty of economic areas from commodities transportation to the cost of commuting to a job. October’s drop led to a .5 percent increase in retail sales described in a separate report. Automobile prices also decreased, and consumers took advantage to purchase more cars. Prices for vehicles (both new and used) fell about .4 percent.

Not Every Category Dropped

The CPI tracks more than cars and gas, however, and many other categories showed a rise in prices. Food continues to climb. Rents continue to rise as demand for housing increases. Medical care and education costs continue to skyrocket. However, overall the index showed a decrease in prices that can help consumers gain a little extra cash in their pockets for the holiday season. If this trend continues, retailers and shoppers can celebrate as they feel their wallets finally fatten a little.