I've been saying for years that the "official" US rate of inflation is vastly understated - deliberately so, in order to allow the US government to manipulate inflation-linked entitlement programs and the like. I wrote about the issue in three articles in January:
Now comes an interesting analysis of "shrinkflation" - the ever-decreasing quantities inside the products we buy for ever-higher prices.
Based on numerous sources, I was able to develop a partial list of products that seem to have shrunk, or whose packages offer less items than they once did. The list includes: cookies (package sizes and in the case of at least one popular brand, the cookies themselves), toilet paper, candy bars, chewing gum and other confectionary products (like Cadbury Eggs), ground pepper, tuna, yogurt, ice cream, orange juice, coffee, bags of tea, sugar, potato chips, toothpaste, deodorant, cake mix, cereal, blocks of cheese, paper towels, napkins, paper plates, crackers, hot dogs, bacon, frozen dinners, heads of lettuce, canned vegetables, frozen vegetables, spaghetti sauce, canned tomatoes, mixed nuts, shaving cream, hair spray, bars of soap, tubs of margarine, detergent, bleach, shampoo, pet food, (some brands of) beer, (some brands of) hard liquor, diet shakes, diet bars, frozen pizza, peanut butter, mayonnaise, Gatorade (in some stores), vitamins, over-the-counter medicines, and even newspapers (page widths have shrunk from 16 inches in the early 1950s to 11 inches in most papers today).
Given the difficulty of finding apples-to-apples comparisons of product prices and sizes at different points in time, I embarked on my own Internet search.
The best source I found was a survey of prices (which does include package sizes) conducted by the Morris County New Jersey Library. Working from this historical source, I picked 30 staples at random for my own “basket” comparison. My analysis focused on the years 2003 to 2014, when the library stopped doing its survey.
I concluded that 25 of these 30 products had probably experienced reductions in sizes or net weights.
I also calculated that the nominal rate of price inflation for these products. Interestingly, for the vast majority of them, the rate of inflation had exceeded the CPI’s official rate of inflation, often by large margins.
For example, in 2003, a jar of Hellman’s mayonnaise was $1.99 and was sold in a 32-ounce container (6.2 cents an ounce). In 2013, the mayonnaise was sold in a 30-ounce container for $4.59 (15.3 cents an ounce). Over 10 years, the per-unit price increase was 146.7 percent compared to the CPI “food at home” figure of 30.3 percent.
Skippy Peanut Butter was $2.19 in an 18-ounce jar in 2006 (12.1 cents an ounce). In 2014, it was sold in a 16.3-ounce container for $3.29 (20.2 cents an ounce). The price increase in eight years was 67 percent, compared to food-at-home inflation from 2006 to 2014 of 24 percent.
. . .
For my part, I came to view shrinkflation as simply another piece of evidence that supports the contrarians’ view that “real” inflation is almost certainly higher than official inflation.I suspect it is telling us that the inflation we see with our own eyes is greater than the inflation figure we read about in The Wall Street Journal.
That is, that ever-shrinking roll of toilet paper might be telling us something the government doesn’t want us to hear.
There's much more at the link. Recommended reading.
As one analyst said some years ago, "If You Want To Know The Real Rate Of Inflation, Don't Bother With The CPI". Shrinkflation underlines how right she was.
Peter
8 comments:
Thanks for keeping these reminders coming!
Never forget that your raise and benefits are matched to the government's reported CPI, not real inflation.
Actually, this practice has been known about and going on for a long time.
Keep the price the same, but now "offer 10 oz. instead of 12 oz.".
But what can one do about it? The industries are the ones in charge of whatever they offer and however they want to offer their products.
Acknowledge, then shrug and groan and bitch.
In some cases it is going metric. See 500 ml bottles instead of 16 Oz. In others it is cost savings, see 'half gallon' cartons of juice or milk that are well under 64 oz. So long as consumers buy it, it will continue.
Years ago Robitussin went one better. They kept the package and pricing the same but changed the recommended dosage. Where once a dose was one teaspoon the new dose was two teaspoons. Water down the product, change the label and voilà, a 100% price increase. Shaving a 7 ounce can of tuna to 6.5 ounces is for pikers.
There is another way for them to deal with inflation that is not as obvious to most people: lower the quality of the contents.
I first noticed this early in Obama's era, IIRC. Quaker Oats suddenly looked the same as the store brands, so I stopped paying for the quality I was no longer receiving.
Reading the contents listings started to show interesting changes. Socks became itchy, and the last material listed bacame "3% other". I figured that if they couldn't define it, they were using the floor sweepings in the mill, and didn't actually know what they were using with any certainty.
It also became somewhat obvious that food producers were lying about the contents in some cases. When I would suddenly have a reaction to a product I had been using regularly, but the label remained unchanged, I could surmise they had done a substitution. This sort of fudgery is very annoying. I've learned to always read the contents when shopping, but accuracy no longer appears to be a target for producers, as it used to be.
Many decades ago I saw an article on inflation. It contrasted buying power with gold. As I recall, a man could buy a very good suit in 1900 for about an ounce of gold. In 1980 a man could still buy a very good suit for an ounce of gold. The currency was worthless but the 'standard' was still pretty visible. I'm not sure it is so anymore. OTOH, I'm retired and haven't bought a suit in 19 years.
I say we peg the value of the dollar to the egg. Ten cents to the farmer for a dozen grade A medium eggs.
Trashbags. I buy a certain brand, always. I just got the last big box last week. In putting them on the shelf, I noticed that a box that was bought 18-24 months ago has 100. A box bought 2-3 months ago had 90. The last box-80. Since I buy them from Amazon, I could go back and check prices. Those, thankfully, were all within $1.
When this economy finally falls, it's going to be faster, harder and further than anyone wants to consider.
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