We are all keenly aware of price inflation. We notice those rising prices every time we go into a store. But the inflation boogeyman is hitting you even harder than you realize. Not only are you paying more for pretty much everything you buy, you’re getting less.
This article was originally published by Schiff Gold.
Literally.
It’s called shrinkflation.
Rising prices don’t just hit consumers. In fact, they impact producers first. As the cost of materials, labor and equipment goes up, companies feel the pinch. Eventually, they pass those costs on to their customers.
But raising prices is bad for business, so sometimes, companies find other ways to cut costs. They shrink packages or simply put less stuff in the same size box. While the price stays the same, you get less product.
Shrinkflation doesn’t show up in the CPI and consumers often don’t even notice, but the effect is the same as rising prices. You ultimately end up with less stuff. It is ninja inflation.
“Downsizing is really a sneaky price increase,” former Massachusetts assistant attorney general Greg Dworsky told NPR during an interview. “Consumers tend to be price-conscious. But they’re not net-weight conscious. They can tell instantly if they’re used to paying $2.99 for a carton of orange juice and that goes up to $3.19. But if the orange juice container goes from 64 ounces to 59 ounces, they’re probably not going to notice.”
MousePrint.org chronicles shrinkflation. Here are some recent examples.
We also see shrinkflation in services. Remember full-service gas stations? Now, we pump our own gas, bag our own groceries and manage our own investment portfolios.
Misplaced Blame
Consumers often don’t notice shrinkflation, but when they do, they get angry, and they usually direct their anger at the “greedy” corporations who are charging them the same amount of money for less product. But there is another culprit who generally slinks around unnoticed.
The Federal Reserve.
Price inflation is a symptom of monetary inflation. As the central bank creates money out of thin air and injects it into the economy, prices generally rise. Economist Murray Rothbard noted that since governments have deemed “paper tickets” and computer digits money, “then the government, as dominant money-supplier, becomes free to create money costlessly and at will. As a result, this ‘inflation’ of the money supply destroys the value of the dollar or pound, drives up prices, cripples economic calculation, and hobbles and seriously damages the workings of the market economy.”
Companies are merely responding to their own cost problem when they shrink package sizes. If they didn’t, they would have to raise the price. And that would make you mad too!
When it’s all said and done, you end up paying more and getting less.
You likely have never heard a student exclaim at a school career day, "I want… Read More
American car owners are facing a wall of bad debt to finance vehicles they can’t afford —… Read More
There are well over a million asteroids in the solar system. Most don’t cross paths… Read More
The top US auto safety regulator on Tuesday said it had opened an investigation into… Read More
A new report provides insights on the future price of beef, pork, and chicken. The Texas… Read More
The age of Generative AI (GenAI) is transforming how we work and create. From marketing… Read More
This website uses cookies.