Expert: Docs99 - 7/7/2009

Question

Hello, Docs99

This question may seem a bit silly for you,
but as an ordinary person it's something I've been
worried about

I've noticed that in most cases prices, such as university tuitions, bills (e.g. electricity, water, gas, phone) and others keep going up steadily year by year.

Is this steady increase in prices sustainable?

Or is it normal that utility prices increase and decrease
by time (but it happens that in the last decades prices have been increasing only)?

Thanks,

John K.  

Answer
Prices go up due to many reasons.  Utilities, e.g., may go up if the price of oil goes up. My electricity bill from last year was substantially higher than this year's or the year before last, even though consumption was very similar.  Phone is a different story, I have noticed the prices going down, from line maintenance to long distance, significatly lower than twenty, fifteen or ten years ago. I believe the internet and voice over the internet have a lot to do. As for gas and water, they may also be tied to oil prices and electricity, thus, prices may fluctuate accordingly.  University tuitions, well, will certainly factor in utilities in the cost function.  I believe sometimes there is some collusion, most universities try to keep their tuitions at similar leves.  
I do not believe price increases to be sustainable without consequences to the economy, e.g. inflation. Thanks for your queries and trust this helps.