How Consumers Can Take Advantage of Falling Prices

The Consumer Price Index, which measures how much people pay for typical goods and services, dropped 0.4 percent over the past year. That's the first time the government has recorded a 12-month price decline since 1955. While economists typically see that kind of drop as bad news for the nation's economic growth, it's also partly good news for consumers, at least in the short term, because it means they can buy cheaper food, clothes, and other items.

Some items have fallen in price more than others. Falling energy prices, including those for natural gas and motor fuel, helped drive the March price drop. Food also sold for less last month, so a typical shopping trip in March cost about the same as it would have back in October. Dairy products were especially discounted, but the prices for meat, poultry, fish and eggs also went down. Used cars and trucks, airline tickets, and hotels became cheaper, as well.

Not everyone found their wallets surprisingly full, however. Smokers had an especially hard time. Tobacco and smoking products rose in price by 11 percent. New vehicles cost more — about 0.6 percent. Those who prefer the produce aisle had to pay extra; the prices of fruits and vegetables went up. Over the last three months, the cost of clothing went up over 5 percent. Medical care also became more expensive, so it might not be the best time to have an appendectomy or get those tonsils removed (unless a doctor tell you to, of course!)

Here's a guide to what products you can get a good deal on and which haven't come down in price — at least not yet.

Food and Beverages
While the food and beverages index has gone up by 4.3 percent over the past year, how much consumers pay depends a lot on whether they are eating out or cooking for themselves at home. In March, the cost of food eaten at home — everything from pasta to cereal to olive oil -- fell by 0.4 percent. But food eaten away from home, at restaurants or other places, went up, as did the price of alcoholic drinks. That's one reason why personal finance experts say cooking at home is one of the best decisions you can make for your bottom line. Based on the fact that the price of eggs and cereal have been falling, you might want to consider Cheerios for breakfast and a frittata for dinner.

The Verdict: You can get a good deal on food, as long as you're willing to cook it yourself, and say no to that pre-dinner drink.

Housing
The price of housing, which includes rent, hotels, household insurance, and home furnishings, edged up 1.4 percent for the year, but March saw a slight decline. So if you've been putting off buying that trip that requires a hotel stay, now could be your time to make a move. Just be sure to shop around, because prices vary by region, and some establishments are more eager to get your business than others. As for that new sofa that you've had your eye on, you might want to hold off, since the home furnishings index inched upwards in March.

The Verdict: Now is the time to take advantage of cheap hotels, but wait to redecorate your living room.

Apparel
The clothing index, which covers clothes as well as footwear, has been edging up in recent months, but fell slightly in March. For the year, prices are up about 1.5 percent. If you're willing to wait it out and hope last month's trend continues, then don't buy those new Nikes yet.

The Verdict: The cost of clothes appears to be dropping, but it's still up for the year — so try to delay that shopping spree.

Gas
The gas index rose 8.3 percent in February and then fell 4 percent in March, so now is a much better time to fill up the tank than a couple months ago — and much, much better than last summer, when soaring gas prices kept people close to home.

The Verdict: Gas is cheap, but it may not stay that way for long.

Transportation
The transportation index involves much more than just car purchases; it includes gas and public transportation, too. It saw the biggest decline in price of any other category over the last year, dropping just over 13 percent. While the drop in gas prices drove that trend, the pump isn't the only place to find deals. Airfares have declined for seven months in a row, and prices of used cars and trucks have also dropped a bit.

The Verdict: Now is a great time to buy that used Prius or fly to visit family in another city, but hold off on new car purchases.

Education and Communication
The cost of tuition, personal computers and other educational supplies went up 3.6 percent for the year, just as many workers frustrated with a sluggish job market hope to ride it out by going back to school.

The Verdict: College and graduate degrees haven't gotten any cheaper, but they might still be your best option, especially if you are looking to retrain for a new career.