How Consumers Can Take Smart Advantage of Falling Prices

The Consumer Price Index, which measures how much people pay for typical goods and services, dropped 0.4 percent over the past year. That's the first time the government has recorded a 12-month price decline since 1955. While economists typically see that kind of drop as bad news for the nation's economic growth, it's also partly good news for consumers, at least in the short term, because it means they can buy cheaper food, clothes, and other items.

Some items have fallen in price more than others. Falling energy prices, including those for natural gas and motor fuel, helped drive the March price drop. Food also sold for less last month, so a typical shopping trip in March cost about the same as it would have back in October. Dairy products were especially discounted, but the prices for meat, poultry, fish and eggs also went down. Used cars and trucks, airline tickets, and hotels became cheaper, as well.

Not everyone found their wallets surprisingly full, however. Smokers had an especially hard time. Tobacco and smoking products rose in price by 11 percent. New vehicles cost more -- about 0.6 percent. Those who prefer the produce aisle had to pay extra; the prices of fruits and vegetables went up. Over the last three months, the cost of clothing went up over 5 percent. Medical care also became more expensive, so it might not be the best time to have an appendectomy or get those tonsils removed (Unless a doctor tells you to, of course!)

Here's a guide to what products you can get a good deal on and which haven't come down in price -- at least not yet.

Food and beverages. While the food and beverages index has gone up by 4.3 percent over the past year, how much consumers pay depends a lot on whether they are eating out or cooking for themselves at home. In March, the cost of food eaten at home -- everything from pasta to cereal to olive oil -- fell by 0.4 percent. But food eaten away from home, at restaurants or other places, went up, as did the price of alcoholic drinks. That's one reason why personal finance experts say cooking at home is one of the best decisions you can make for your bottom line. Based on the fact that the price of eggs and cereal have been falling, you might want to consider Cheerios for breakfast and a frittata for dinner. The Verdict: You can get a good deal on food, as long as you're willing to cook it yourself, and say no to that pre-dinner drink.

Housing. The price of housing, which includes rent, hotels, household insurance, and home furnishings, edged up 1.4 percent for the year, but March saw a slight decline. So if you've been putting off buying that trip that requires a hotel stay, now could be your time to make a move. Just be sure to shop around, because prices vary by region, and some establishments are more eager to get your business than others. As for that new sofa that you've had your eye on, you might want to hold off, since the home furnishings index inched upwards in March. The Verdict: Now is the time to take advantage of cheap hotels, but wait to redecorate your living room.

Apparel. The clothing index, which covers clothes as well as footwear, has been edging up in recent months, but fell slightly in March. For the year, prices are up about 1.5 percent. If you're willing to wait it out and hope last month's trend continues, then don't buy those new Nikes yet. The Verdict: The cost of clothes appears to be dropping, but it's still up for the year -- so try to delay that shopping spree.