EDITOR'S NOTE: Shrinkflation is real and it's happening along with inflation so we, as average consumers don’t realize consumer price inflation is even worse than it seems, according to Deflation.com. Shrinkflation is when companies lessen the size, quantity, or quality of their products smaller but charge the same amount. For example, if everything about your favorite box of cookies remains the same, except that there used to be 20 cookies in the box and now there’s 18, that’s shrinkflation. Murray Gunn writes, “the bottom line is that consumer price inflation has probably been much higher than stated in official statistics over the years.”
Shrinkflation is real.
I know I bang on about getting older but believe me I am a relative whippersnapper at Elliot Wave International. And that’s what’s makes EWI unique. The collective experience of the financial markets within EWI’s staff adds up to many centuries, which is a good thing. Given that the markets are driven by human nature, the financial and commodity markets is one realm where experience counts. As the legendary Jesse Livermore stated:
“The pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.”
Indeed, as we all get older, we cannot help ourselves when looking at a staple product such as a chocolate (candy) bar and say “for goodness’ sake, it used to be much bigger!” (No Freudian gags please Ed).
This is the thing. We don’t particularly notice that the price of a chocolate bar has quadrupled over the past 40-odd years. After all, we say, well, that’s (price) inflation. What us old timers (sic) do notice, though, is that we are paying four times the price for (probably) half the product we used to.
This is what is known as shrinkflation. From Wikipedia:
In economics, shrinkflation, also known as grocery shrink ray or package downsizing, is the process of items shrinking in size or quantity, or even sometimes reformulating or reducing quality, while their prices remain the same or increase.
Essentially, as we are all too well aware, products, especially food, have become smaller whilst prices rise. We, as a society, accept it because it’s a drip, drip situation, much like the “nudge effect” of political correctness. As the graphic below shows, U.K. chocolate bars have become much smaller over the years.
So, what’s the point?
The bottom line is that consumer price inflation has probably been much higher than stated in official statistics over the years. After all, your basket of goods and services is not the same as mine. Not that I buy a basket-full of candy bars every week (I wish).
Nevertheless, when, and if, Santa comes down your (environment-friendly) chimney tomorrow night, expect him to glide down gently on account of a deflating sack.
Originally posted on Deflation.