Dollar Tree loses its 35 year war with inflation

FEE’s Peter Jacobsen writes, “Inflation has ruined one of my go-to examples for my macroeconomics students. Whenever I discuss inflation with my students, I test their understanding of economics by highlighting the puzzle of the Dollar Tree, an American retail chain that sells goods at discount prices. Between the year the Dollar Tree was founded (1985) and today, the price of goods and services have risen 2.63% on average every year.

There used to be 5s and 10s.

Now we will tell the next generation how there used to be dollar stores. If you don't understand how and why that happens, hit a pause on politics & take some time to learn economics.@PeterPashute for @feeonline:https://t.co/hs2hLhQP55 — Hannah Cox (@HannahDCox) October 15, 2021

However, in spite of unpredictable swings in the economy and prices, one store has remained consistent throughout it all. Dollar Tree has long been known for being the last true ‘dollar store’ which spans the whole US. For the last 35 years, when you walked into the Dollar Tree, you knew you wouldn’t spend more than one dollar per product.

All of that is changing, however. After 35 years, the Dollar Tree has announced they’ll begin to carry products with a price over one dollar. This invites two important questions: how was the store able to keep prices low for so long, and what is changing now?”

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