Wireless Rates Are Due To Climb – Consumer Expenditures

– September 2018

Cell phone bills are rising across the country as providers eliminate promotions and consolidate operations. The announcement of recent mega mergers in the industry has reduced the number of providers and lessened competition, leading to increased rates for customers.

As tracked by the Labor Department’s Consumer Price Index (CPI), the cost of cell phone service is a measurable component of the index. Over the years, cell phone costs have become a vital and expensive service for consumers nationwide, almost as important as groceries or rent. It is estimated that roughly 95% of Americans own a cellular phone and pay a monthly service fee to one of several providers.

Following years of technological advancement and intense competition for market share, cellular providers kept rates low. Adjusted for inflation, cell rates have consistently fallen in price since 1997, meaning that as the price for other services rose, cellular rates fell.

The recent mergers and expansion of new cellular infrastructure has begun to raise rates. Rather than absorbing merger costs and infrastructure build out, cellular service providers are instead passing along the costs to consumers. The higher fees are considered inflationary and thus add to the overall inflationary pressures that are gradually rising.

Source: BLS, Labor Department, https://www.bls.gov/news.release/cpi.nr0.htm

 

 

Disclaimer:

The information published herein is provided for informational purposes only, and does not constitute an offer, solicitation or recommendation to sell or an offer to buy securities, investment products or investment advisory services. All information, views, opinions and estimates are subject to change or correction without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. The appropriateness of an investment or strategy will depend on an investor’s circumstances and objectives. Please consult your Advisor about what is best for you.

 

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