Inflation: ETF Sectors That May Have Beat The Odds...For Now | ETF Trends

The debate is on as to whether or not inflation is here. As prices on consumer products increased 0.4% in January and by 1.6% since the beginning of 2010, the “I” word is real. But there are some areas that are fighting off inflation and could affect investments and exchange traded funds (ETFs).[Food ETFs: Are Restaurants In Denial?]

Seth Fiegerman for Financially Fit on Yahoo Finance reports that economists will often cite from the same handful of factors that could sharply drive prices up and cause rapid inflation to take root. Some note the rising cost of commodities, like oil, could drive up the prices on many consumer goods. Despite the numbers, Fiegerman points out several consumer products that are still declining in pricing: [4 Consumer ETFs For Renewed Confidence.]

  • Household Supplies: The price of household items like furniture, linens and appliances has dropped sharply during the past year. These items are tied in with the housing market and may stay depressed for months to come. Vanguard Consumer Discretionary Sector ETF (NYSEArca: VCR)
  • Electronics: Tablet computers and smartphones may seem expensive, but the truth is that electronics on the whole always tend to get cheaper from year to year and continue to do so despite rising prices elsewhere in the marketplace.The cost of personal computers dropped by 9.2% between July and January, while the price of hardware and IT services decreased by 5% during the same period. Its the classic tech pattern, as new technology arises, older tech gets cheaper. iShares Dow Jones U.S. Technology Index Fund (NYSEArca: IYW)
  • Women’s Hosiery and Men’s Clothing: Prices on women’s hosiery dropped by 2.7% in the second half of 2010 while prices on men’s clothing in general declined by 1.1%, and infant apparel declined the most of all, with prices going down by 9.3% during this time. These prices are not expected to rise anytime soon, as much of this stuff is produced overseas. SPDR S&P Retail (NYSEArca: XRT)
  • Utility (Piped) Gas Services: Oil prices may be up at the moment, but the price of natural gas is actually going down. Homes and businesses that have piped gas services saw prices decrease by an average of 10.5% between July and January of this year. Electric prices were up 1.2% over the same time. United States Natural Gas (NYSEArca: UNG)
  • Meat/Peanut Butter: Food prices are up but meat prices are down 2.4%. As farmers can not feed stock, they are putting the animals to slaughter, which means we have a temporary increase in the supply of meat. However in the next couple months, we may see meat prices pick up. Meanwhile, the cost of peanut butter declined by 4.9% during this time period. PowerShares Dynamic Food & Beverage (NYSEArca: PBJ)

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.