The Christmas toys under the tree in 2010 were priced at the cheapest level in history, according to CNNMoney using Bureau of Labor Statistics data.  A toy priced at $100 in 1980 cost only $55 in 2010, a drop of 45%.  Accounting for inflation, the drop is closer to 80%. 

Toy prices have dropped because manufacturing is cheaper (often from offshore sources) and retailing and distribution have become much more efficient in the last 30 years, allowing products to move from factory to consumer in ways that cost a fraction of what they used to cost.  Many of those changes have been driven by improved technology, which allows retailers, especially mass merchants, to control inventory levels more efficiently and to handle products with lower labor costs at every stage in the supply chain. 

The article does point out that price reductions have primarily affected commodity products, and that premium products, especially those at the beginning of their life cycles, often command premium prices.