January shows a strong sequential trend for some uplift in pricing off of the holiday’s promotionally-driven pricing
Stephen Baker, director of industry analysis for The NPD Group

Pricing pressure continued to let off steam in January as US retail prices for consumer electronics fell one percent from December levels, according to the latest NPD Consumer Electronics Price Watch, a monthly pricing monitor from The NPD Group.

This one percent decline was the lowest drop since last July, when prices saw a comparable one percent decrease. When compared with January 2004 and January 2003, prices remain far below those totals with the average selling price down 19 percent and 36 percent, respectively. The total cost of the basket of 27 electronics goods tracked by the NPD CE Price Watch is now $10,825, far below the $16,999 this same basket cost in January 2003.

“January shows a strong sequential trend for some uplift in pricing off of the holiday’s promotionally-driven pricing,” said Stephen Baker, director of industry analysis for The NPD Group. “This year, 13 of the 27 items showed a price increase from December, which contrasts favorably with January 2004, when 15 of the 27 items showed price increases from December to January. This trend belies much of the conventional wisdom that states retailers are out to liquidate their remaining holiday stock in January.”

Of the 13 items that recorded increases in January 2005, the majority of them were traditional CE based products, a category that typically sees peak sales during the holidays. Among the big gainers from December to January were home-theaters-in-a-box (up 32 percent) portable DVD players (up 7 percent), portable CD players (up 9 percent) and a basic progressive- scan DVD player, which was up 18 percent over December’s pricing levels.

Items that reported price declines were led by IT products and televisions, as consumers looked for bargains in two categories that typically don’t see huge volume swings into the new year and are, therefore less likely to see significant changes in price. This year, another catalyst of the price drops was the continuing decline in component prices.

The product showing the largest drop in price in January was the 42-inch ED plasma screen, which fell seven percent. The 17-inch LCD PC monitor also showed large drops in price, dropping five percent to a record low of $351. While the companion technology product, the 20-inch LCD TV, saw a price increase in January, it was less than one percent, as this product has stayed near its all-time lows for three consecutive months. Desktop PC prices also fell, seeing a sharp three percent decline to $682, the second straight month of retail prices below $700.