Dealing With Neopian Deflation

A Brief Overview

I think it's only natural to first explain both inflation and deflation in some detail, though I won't go too much into them as there are tons of other articles on this topic.

Basically, inflation is when the cost of an item goes up, say for example, a codestone costing 3000 neopoints and then costing 4000 neopoints. In terms of supply and demand, there are more neopoints then there are items, in other words, the same amount of neopoints now buy less. In an inflating economy, spending is encouraged as opposed to saving, since things will only cost more over time. As a matter of fact, investing in items is usually seen as a good way to make neopoints during inflation.

Deflation, on the other hand, as you may have guessed is the exact opposite. A codestone costing 3000 neopoints and then costing 2000 neopoints, for example, which means that in supply and demand terms neopoints are scarcer compared to items. In a deflating economy, saving is encouraged as opposed to spending, as items will only cost less in the long run.

As you can probably see, both of these seem to escalate one another. Inflation encourages spending so more neopoints are out, and the greater the supply of neopoints, the more inflation, and so on. In other words, people see the price of goods are increasing, so they buy them so they can sell them later, and that drives the price of that item up, and so on. Same thing with deflation, the more people save, as deflation encourages, the less neopoints on the market, leading to even further deflation. In other words, people see an item is dropping in value, so they choose to wait to buy it or those who have lots of that item want to sell it quickly, causing the price to lower even further.

Both of these things have their merits and demerits, but the main thing I'd like to point out that the Neopian economy has always been an inflating one. Almost always, I mean. I remember from the time that I was just a newbie and all the articles I'd ever gotten through, inflation was always taken for granted, like it was going to go on forever. You can go back and see that the Neopian Times is littered with articles about how items are inflating, and how investing in items are a much better way to make neopoints rather than save them in the bank. And I think lots of Neopians like myself also thought that prices would just keep on going up, but apparently there has been a big change in the Neopian economy that suggests that we might as a matter of fact be heading towards massive deflation.

Now, first of all I'd like to point out that when we say the economy is inflating/deflating, we mean as a whole on average. It's possible for one single item's value to decrease during inflation, and for one item's value to increase during deflation, as a matter of fact there are generally several items that don't follow the trend. Of course, that makes it slightly harder to actually ascertain that the economy is deflating or inflating, but we can certainly still try.

Now here's where my argument begins. Though some things have gone up in price, I would argue that the items the majority of Neopians care about have deflated. Some old plot prizes will always inflate thanks to a dwindling supply, but I'm mainly going to examine the items that almost all Neopians want. Generally, when we say that items are inflating, we usually talk about these items, because they are things that almost everyone wants.

Paint Brushes

Neopians throughout time have always wanted paint brushes. These are one of the few things that are always in demand. And, as we can see, they've taken quite a bit hit price wise. Pirate Paint Brushes have gone from around 10 million to 500,000 neopoints. Maraquan Paint Brushes have gone from around 9 million to 5 million, a smaller loss certainly, but still a large amount. Grey Paint Brushes have gone from around 4 million to 2.5 million, and Cloud Paint Brushes from around 60,000 to 35,000. Some have no doubt, actually remained stable or gone up, for example the Christmas Paint Brush (but I think that currently it's because the holiday season has only just about ended).

The most telling, though, of course, would be the Baby Paint Brush. They have almost always been in demand, and I remember that they would often be used as tokens to trade on the Trading Post and were sold for quite near their Hidden Tower price tag, 600,000 neopoints and so went for 595,000 neopoints almost within seconds. However, nowadays most of them are staying on the lots for a much longer time, and are sold at lower prices to the tune of 550,000-570,000 neopoints.

I think though that we can see a trend of paint brushes generally declining in value, which is the first thing that we should probably notice as they are usually the most in-demand items in Neopets and a good indicator of how the Neopian economy is doing.

Draiks/Krawks

While pets aren't items, Draik Eggs and Krawks have almost always remained a goal for many Neopians, but I've already done an article on that. I'll just quickly add that Pirate Draik Eggs once went for 20 million and now go for 1.7 million, and Krawks have lost even more value as a Pirate Krawk Morphing Potion once went for 20 million and now goes for only 400,000 neopoints. Other items that give out these pets have also similarly deflated, though probably not to such a large extent as those two and the Magical Pirate Krawk Plushie. I remember when Draiks/Krawks were a goal for many users and they would save for years to get one, though obviously that's changed.

Morphing Potions

Along with paint brushes, these are also always in demand. After all, if you have a dream pet, you're going to need a morphing potion if it is a different species. Almost all morphing potions have declined steeply in value, thanks to them being given as prizes. A Poogle Morphing Potion would have set you back around 200,000 neopoints some time ago, though now a Red Poogle Morphing Potion goes around the market for only 14,000 neopoints. Add to this fact that morphing potions, in general, tend to be hard to sell since fewer Neopians want species changes as much as they want colour changes, and you have a large dent in their value. Krawk and Draik morphing potions, which used to be kings in terms of value, still hold some water though only a slight amount from what they once did.

Petpets

Of anything to buy for your neopet, why not a petpet to keep them happy? There have been a lot of prizes giving out petpets lately though, and you can see a lot of them dropping quite a lot in value. A Baby Space Fungus now costs only 200 neopoints while they once cost around 10,000 neopoints. Very few petpets have managed to retain their value.

Secret Laboratory Map

Access to the lab has always been a Neopian goal, and surprisingly, this seems to have retained quite a bit of its price, making it unique among this list.

Battledome Items

While the Battledome has always been a more marginal activity for a few, the fact remains that more are getting interested in it thanks to the new Obelisk Skirmishes. Codestones have gone down in value several hundred neopoints each, and of course, the Red Codestones have drastically gone down in price from a few being unbuyable some time ago to the most expensive now costing around 36,000 neopoints, so training costs have gone down a lot. Dubloons have lost a lot of value, a one dubloon coin used to cost around 3,000 neopoints but now goes for only 800. There are lots of cheap weapons around now, making some alternatives less valuable. Take for example the Ring of the Lost, which had its price disrupted thanks to the release of the Hanso Charisma Charm.

Some Other Stuff

This doesn't really rank as a category, but I'd thought that I'd list out some other major things that have gone down in price. I remember buying a nerkmid for the avatar, it cost me around 250,000 neopoints. The same one would sell for about 65,000 neopoints today. The Cursed Elixir has gone from 800,000 to only 20,000 neopoints (which is quite significant if you've read my other article on how you can use it to make a huge profit), and Neocola Tokens now only cost around a 1,000 neopoints instead of 15,000.

Now, we should probably question why these things have been happening. A possible explanation is that neopoints have become harder to get, after all, 50,000 neopoints used to be a whole lot way back in the day, but making that much was way harder than it is now. But I don't think that this is the case, after all, games still give out the same amount of neopoints, and there are new things around like the Habitarium which give out insane amounts of neopoints a day. (Some people make over 100,000 neopoints a day from their Habitarium!) Also, it seems more people are becoming aware of things like Food Club and the Stock Market which also put more neopoints out into the Neopian economy. So, a shortage of neopoints doesn't seem to be a logical explanation. As a matter of fact, you'd probably expect such a large influx to cause prices to inflate, not deflate, so we're probably going to have to go on to the next explanation.

If neopoints haven't become scarcer, we can only assume that demand for items has gone down. The reason for that can probably mostly be linked to TNT giving out lots of items as prizes. The Forgotten Shore has destroyed the cost of Draiks and Krawks, and the new Battledome has given out codestones, petpets, and a whole lot more along with prizes from Key Quest. Some might point out that with the recent Faerie Quests more Fountain Faerie Quests were released, lowering demand for paint brushes.

Now, I guess by now I might have convinced most of you that yes, items have been deflating, particularly the ones that users use the most, though clearly some things are increasing in value as some always tend to do. Some of you may be asking this now, so what? So what if things are deflating? Is that even a problem? If it is, what can we do about it?

Well, inflation and deflation both have their own problems, and neither can actually be said to be better than the other. Inflation lets restockers and item investors make quite a penny, but it means that gamers and other Neopians who make neopoints from games or stocks, not from selling items, lose out in the long run. Deflation on the other hand makes restocking a bit more difficult, and means that selling stuff gets harder, but things become cheaper for those who play games.

Deflation As A Problem

However, deflation usually indicates a sluggish economy since things are harder to sell, and as Neopets has always sported an interesting user-based economy as one of its greatest things around, this is a problem. Many Neopians play Neopets because the user-based economy is so interested and so great a thing to participate in, though clearly selling things is harder and investing in items doesn't look like a good deal anymore, so that really hurts both the economy and the players who enjoyed participating in it. Some people may, however, think that this is good for those Neopians who don't restock and don't invest in items. You have to admit that that is one good point in favor of deflation. After all, with rampant inflation, gamers would generally lose out in the long run, but in deflation, gamers get a much better deal. But very few people play only games, and we all at the very least dabble in trading items, so I believe that even for them this is a matter of concern. Not to mention that if things become too inexpensive, they lose their value. Draiks and Krawks aren't seen as valuable as they once were, and some might start questioning the point of playing. After all, you can go ahead and make so many neopoints easily, and prices have gone down, so there's less to work for on Neopets.

As for what we can do to change the situation, there isn't much. One obvious tactic would be to make items more rare and stop giving them out so much, but that's up to TNT, so what can we do about it? If you read the article from long ago, it mentions that you should try to buy things which are slightly more expensive on the Shop Wizard and go on a spending spree, but that's really not going to be effective. After all, this isn't just a little bit of deflation like that long ago, this is massive deflation, and probably the first time that's ever happened in Neopian history. Buying a few more items isn't really going to drive their prices up. Whether you think it is good or bad depends entirely on you.

Some people might be benefitting from this though. Gamers especially, as I've mentioned, and maybe it is time that we gave them a chance, after all, in Neopia's very long history of inflation, gamers have been losers in the long run, but that's changed now. Even I have to admit that buying things for less seems like a pretty good deal. Restocking is still a nice way to make neopoints, only relatively less compared to what it was before.

But regardless of what you do, the new reality of Neopian deflation is one that we're going to face. Inflation used to be the norm, and maybe that will be back soon, but for now, I think I'll keep saving until that time comes.