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Show HOW PRICES DEFLATE Consumer Resistance Does It Those same forces which recently knocked down prices of food and other commodities in a spectacular outburst have been quietly at work all during the past year. Rising supply in a number of lines of goods has caught up with demand, de-mand, and in some cases it has bumped into demand and money supplies on their way down, according accord-ing to an analysis by the family economics bureau of Northwestern National Life Insurance company. Poultry, eggs, potatoes, oranges, canned fruit juices, certain canned fruits and vegetables, preserves and jellies all have had little private recessions re-cessions of their own during the past year. By the end of 1947 the prices of most of these items either had leveled off or were actually below the levels of a year previous, the study says. In manufactured goods, the supply sup-ply of small radios recently has overflowed the level of demand, with prices skidding in many cities. Large radios are very close to current cur-rent demand, as are washing machines, ma-chines, stoves and deep-freeze units. As long as consumers demand goods despite rising prices, the study pointed out, the manufacturer will pay higher and still higher costs for materials and labor, rather than have his production shut down and his flow of goods to the consumer cut ofT. Retail stores buy his finished products despite higher manufacturing costs because be-cause they know their customers want the goods. But when enough consumers indicate indi-cate they will not pay increased prices, then manufacturers and stores stiffen their own resistance to higher prices of materials, wage boosts and the resulting price markups mark-ups for the finished goods because it is evident that such further increases in-creases will prevent the products from being sold. When demand falls off and meets rising supply, the result is a halt in the price rise and often a sharp downturn. Sometimes consumers, merchants and manufacturers all decide that prices are going to keep on declining and therefore cut their buying still more all along the line. Downward price spirals usually start in that way, the study observed. |