A brief discussion: Does consumption become more expensive or cheaper as prices fall?

After reading the article on crystal flyswatters, I felt I opened up a new perspective. From my point of view, I’d like to briefly discuss whether consumption becomes more expensive or cheaper as prices fall (Davis Double Kill). First, let me state my opinion: it depends on which income class you stand in and what consumption scenarios you observe. When growth stalls, all conclusions are no longer black and white.

1. From a macro perspective: per capita income is the anchor for consumption. When it grows, both quantity and price increase; when it slows down, divergence occurs.
   Official goal: By 2035, basically achieve modernization, with per capita GDP reaching the level of a moderately developed country, corresponding to a per capita income of about $23,000–$35,000. Compared to the 2025 national per capita disposable income of 43,377 yuan, there is huge medium- to long-term room for growth.
   The question is: can this growth continue?
   During the phase of continuous income growth: consumption shifts from survival to development and enjoyment upgrades. Demand expansion drives total consumption up and the prices of quality goods upward. Consumers are willing to pay for brands, quality, and service, leading to overall increases in both volume and price, with no basis for sustained decline.
   During the phase of stagnating or slowing income growth: consumption immediately stratifies. High and low purchasing power groups behave differently, leading to a divergence pattern of “some items get cheaper as prices fall, others get more expensive.”

2. Population structure: aging + declining birthrate long-term reshapes consumption, with essential needs becoming more expensive and optional goods becoming cheaper.
   Population structure is a slow variable but determines the long-term direction of consumption, directly changing demand categories, scale, and price elasticity.

3. Aging: essential consumption tends to increase in price, while non-essential consumption sees both volume and price decline.
   Rigid needs like medical care, elderly care, and nursing have strong demand rigidity and slow supply expansion, making prices tend to rise continuously;
   An increasing elderly dependency ratio will lower overall social consumption rate. According to “China Civil Affairs” analysis: a 1% increase in the elderly dependency ratio reduces residents’ consumption rate by about 0.51%;
   Rigid elderly care expenses will squeeze the discretionary consumption budgets of middle-aged and young groups, leading to declines in categories like travel and entertainment. Coupled with the negative population growth after the decline in birthrate, overall consumption scale will shrink in absolute terms. Japan’s experience also confirms: after reaching a population peak, private consumption growth significantly slows down. Ultimately, this results in essential services becoming more expensive and ordinary optional consumption becoming cheaper.

4. Declining birthrate: mass markets like maternity and infant products, education face both volume and price declines, but niche essential needs still have support.
   The maternal and infant, preschool education markets have entered oversupply due to shrinking consumer groups, with overall volume and prices falling together. However, supply-side adjustments lag, and fixed costs are spread over fewer users, causing per capita education costs to rise rather than fall.
   Niche essential needs (such as specialized medical formula, high-end customized early education) with precise audiences and scarce supply can still maintain stable or rising prices;
   Meanwhile, as the main consumer group—young people—decreases, long-term consumption potential weakens, and expectations for innovation and income growth are also dragged down, further suppressing mass consumption.

5. Technological impact: AI-driven job displacement and the Matthew Effect
   AI does not replace employment itself but redistributes consumption capacity. It precisely targets routine jobs (such as accounting, customer service, junior legal roles, programmers), which are the income sources for middle-class families. When middle-class income is squeezed, they will first cut back on non-essential items like travel and luxury goods, shifting toward high-cost-performance, affordable products, forcing these categories to continue lowering prices to survive.
   On the other hand, high-end professionals mastering AI tools (algorithm engineers, data scientists) see their incomes multiply, and their consumption shifts toward scarce, personalized, high-value-added services: customized AI solutions, private health management, art collection. These supply-side barriers are high, and demand growth directly pushes prices upward.
   Ultimately, AI accelerates the collapse of the middle class, splitting the consumption market into two parallel worlds: high-end inflation and low-end deflation.

For individuals, whether prices fall more or less depends on two factors:
Rigid coefficient: the higher the proportion of rigid needs like medical care, elderly care, and education in consumption, the more expensive life becomes.
Income coefficient: the more a person relies on routine jobs that AI can replace, the cheaper their consumption world might be (since they can only afford cheap goods).
For most people, the real situation is: things they don’t need are getting cheaper, while things they do need are becoming more expensive. Cheap and expensive are no longer just price issues but class issues.