Where Inflation Has Been HIding
Inflation has been hiding. Most government inflation numbers show low inflation; on the other hand, most people "feel" that "everything's going up." So what gives? I think the answer lies in the fact that we've become "packaged food" consumers.
While many of us buy fresh meat and produce and stay away from "packaged" products for health and taste reasons, the fact is most of us still buy food that comes in cans and boxes. Just go shopping in a supermarket and you'll see the evidence. And it's in those packaged goods that you'll find inflation hiding.
The way inflation hides is really pretty simple to explain. Prices for packaged goods stay the same, but you get less.
Years ago, I knew someone who headed up marketing for a particular potato chip company whose products I liked. (I do eat some packaged stuff.) I had noticed that the weight on the bag of chips I typically bought went down, but the price stayed the same. So I brought this up to her. She smiled and acknowledged - proudly - that the idea was something she had thought of. (Out of consideration, I won't mention her name.)
I"m not saying she was immoral or anything. She was just doing her job of protecting or increasing profit margins while increasing market share. And she knew that if she increased prices and her competition didn't, she would lose market share (and probably not get her usual bonus). But the company's profits were crunched and they told her something had to give. Hence her "brilliant" idea. We both laughed and I think I shook my finger at her, or something like that. (I've since switched my allegiance to other brands of potato chips.)
Anyway, I don't know if she was the first marketing genius to come up with this idea of keeping the price level and reducing what you get in the package, but the idea really did catch fire. And now it's pretty common.
So while everyone prattles on and on about how prices for food haven't gone up, what does that prove? If what you get is less for the same price, isn't that the same as if the price increased?
I"m assuming that manufacturers think that consumers really don't pay attention. Either that or they've done studies that show them that even if people do notice, they'd prefer this kind of sleight of hand to having to pay a higher price.
On the other hand, what excuse does the government have when it keep drumming into our ears that inflation isn't going up? They obviously know what's going on. My guess is that they're just pursuing their usual practice of repeating something that's not true over and over again until people think it's true. And I'm also guessing that they think that we're all too dumb to figure all this out.
The thing is, I know I'm not that smart, and I figured this out a long time ago. It's probably reasonable to expect that lots of other folks have figured it out too.
So I guess we all just go along with this. What else can you do, stop eating chips? In any case, just don't think that inflation is as low as "the numbers" suggest.
Meanwhile, with smaller portions in the package, I also guess that we're eating less. Oh, right! This is actually a good thing. I forgot about how we're all overweight. So maybe this really is a good strategy to get us all to eat less. Of course we're not. If we were, shouldn't we see people getting slimmer?
Well, that's what happens when you try to think about what the government's up to. It winds up not making much sense.
So now that we found inflation hiding in all those packaged goods (and it's not just food items, by the way), let's at least eat fresh meat and produce, okay? It's better for you. And you might drop a few of those excess pounds too.
While many of us buy fresh meat and produce and stay away from "packaged" products for health and taste reasons, the fact is most of us still buy food that comes in cans and boxes. Just go shopping in a supermarket and you'll see the evidence. And it's in those packaged goods that you'll find inflation hiding.
The way inflation hides is really pretty simple to explain. Prices for packaged goods stay the same, but you get less.
Years ago, I knew someone who headed up marketing for a particular potato chip company whose products I liked. (I do eat some packaged stuff.) I had noticed that the weight on the bag of chips I typically bought went down, but the price stayed the same. So I brought this up to her. She smiled and acknowledged - proudly - that the idea was something she had thought of. (Out of consideration, I won't mention her name.)
I"m not saying she was immoral or anything. She was just doing her job of protecting or increasing profit margins while increasing market share. And she knew that if she increased prices and her competition didn't, she would lose market share (and probably not get her usual bonus). But the company's profits were crunched and they told her something had to give. Hence her "brilliant" idea. We both laughed and I think I shook my finger at her, or something like that. (I've since switched my allegiance to other brands of potato chips.)
Anyway, I don't know if she was the first marketing genius to come up with this idea of keeping the price level and reducing what you get in the package, but the idea really did catch fire. And now it's pretty common.
So while everyone prattles on and on about how prices for food haven't gone up, what does that prove? If what you get is less for the same price, isn't that the same as if the price increased?
I"m assuming that manufacturers think that consumers really don't pay attention. Either that or they've done studies that show them that even if people do notice, they'd prefer this kind of sleight of hand to having to pay a higher price.
On the other hand, what excuse does the government have when it keep drumming into our ears that inflation isn't going up? They obviously know what's going on. My guess is that they're just pursuing their usual practice of repeating something that's not true over and over again until people think it's true. And I'm also guessing that they think that we're all too dumb to figure all this out.
The thing is, I know I'm not that smart, and I figured this out a long time ago. It's probably reasonable to expect that lots of other folks have figured it out too.
So I guess we all just go along with this. What else can you do, stop eating chips? In any case, just don't think that inflation is as low as "the numbers" suggest.
Meanwhile, with smaller portions in the package, I also guess that we're eating less. Oh, right! This is actually a good thing. I forgot about how we're all overweight. So maybe this really is a good strategy to get us all to eat less. Of course we're not. If we were, shouldn't we see people getting slimmer?
Well, that's what happens when you try to think about what the government's up to. It winds up not making much sense.
So now that we found inflation hiding in all those packaged goods (and it's not just food items, by the way), let's at least eat fresh meat and produce, okay? It's better for you. And you might drop a few of those excess pounds too.
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