Prices for Equipment Continue to Stabilize

Printing equipment and paper prices continue to stabilize under pressure from both rising printing activity and even larger increases in paper and machinery orders from other industries in an expanding economy.

July printing shipments were 4.9% above levels seen last October, the weakest month of the year. Printing shipments in June and July were the highest in four years, although still 10% below the exaggerated peak shipments in the summer of 2000. Printing equipment prices rose 0.3% in July after being essentially steady for a year. Paper price increases have been much larger, with suppliers now requesting higher prices for almost all grades.

As general inflation rises, printers should expect equipment and supplies price increases to continue for several years. As usually happens in a period of expanding business, equipment price gains will be less than the economy's overall inflation, while paper price increases will be substantially more.

Aggregate inflation in the U.S. economy, excluding volatile food and energy prices, dipped to near zero late in 2003, but is now back to 1.5%. Ahead, inflation will rise to near 2.0% this winter and to about 2.5% by the end of 2005. In spite of recent scare headlines about steep price increases for oil and other commodities, there is little risk of substantially higher inflation. Commodity supplies have now caught up the increase in demand, so price spikes have retreated without raising the inflation rate.