Hidden inflation: what is shrinkage, skimping and greed?
Save more, spend smarter and grow your money
As inflation continues to make headlines, you may have started hearing about the concepts of shrinkage, skimping, and greed. These are subtle ways in which companies try to mitigate or take advantage of the impact of inflation on consumer expectations.
It is important to understand these concepts in order to avoid manipulation. Let’s look at each in a little more detail.
What is Shrinkflation?
The traditional concept of inflation implies paying more for the same commodity than before. The concept of shrink implies paying the same amount as you were before, but getting a smaller size.
For example, let’s say you paid $5 for an 18-ounce jar of peanut butter last year. But now, you’re paying $5 for a 15-ounce jar of peanut butter. While the final price hasn’t changed, you’re getting less than before.
Shrinkage is often harder to detect than traditional inflation because it’s difficult to compare changes in size unless you remember how much you used to get. If you can’t remember that a jar of peanut butter used to hold 18 ounces, you might not realize that you are now effectively paying more.
What is skimpflation?
Have you dined at a restaurant where the food was not as good, but the prices were the same or higher? Have you bought an article of clothing only to find that the quality is not as good as it used to be? If so, you’ve certainly experienced skimping.
Skimpflation can refer to businesses keeping prices the same, but downgrading the overall customer experience. For example, many businesses that offer free shipping have switched to longer processing and shipping times. Businesses will use skimping to avoid increasing prices and losing customers while meeting their revenue targets.
What is Gridflation?
Even though crude oil prices have started to decline, many consumers still see a fall in overall gas prices. This has led some experts to accuse gas companies of “greed”, which refers to the practice of raising prices even though the underlying costs have not increased.
Greedflation is a way for companies to take advantage of inflation and use it to raise their prices when they don’t really need to do so. It can also refer to companies that are raising prices more than necessary to exploit their customers. Since consumers are aware that external factors are causing prices to rise, they expect companies to increase their rates.
How to combat inflation of all types
Since inflation remains a powerful force in the economy, consumers need to know how to save money for any occasion.
Not all businesses engage in the types of inflation mentioned above, but you have to look closely to find companies that aren’t trying to exploit customers.
Try to shop as much as you can and compare prices for all businesses and services, from your hair salon to your mechanic. Always ask if there are any discounts or coupons available.
research cost in advance
During periods of high inflation, businesses often raise prices without informing customers. You may not even know the price increase until it’s time to pay.
To save money and keep an eye on various signs of inflation, you should research prices ahead of time. For example, if you’re planning to go out in the evening, check menus online ahead of time so you know what to expect.
buy in bulk
Buying in bulk from warehouse clubs can be an easy way to save money and fight inflation. To maximize your savings, only purchase items that won’t spoil before you use them. For example, canned goods, frozen products and dry goods will last longer than a two-pack of Greek yogurt or milk.
Some warehouse clubs have their own credit cards that offer cash back when you make purchases, which can save you even more money.
In addition, many warehouse clubs sell gas for less than you would pay at a regular gas station. You can fill up the tank and get extra savings when you store groceries. Pharmacies at warehouse clubs like Costco often have lower drug prices than drugstore stores, so you can get a drug for a lower price, too.
You can also shop in bulk at stores like Whole Foods, where they sell vegetables, grains, and spices in bulk. This lets you save money on packaging, while only buying what you need.
View Unit Prices
If you’ve always compared item prices to determine which is cheaper, you should start using the per-unit price. Price per unit is the total cost divided by the amount, usually in ounces or grams. This is the most accurate way to compare two different items.
You might be surprised by what you find when you start doing this. Most of the time, the price per unit of a larger item is lower than that of a smaller item. However, if the smaller item is on sale, it may be cheaper.
Check the unit price every time you make a purchase, even if you’re only buying what you did last week. You never know when prices may change.
Make use of every discount possible
These days, there are tons of ways you can pay less than the retail price – but you have to be diligent and creative.
Sign up for email newsletters to receive discounts for new subscribers. Use a browser extension like Rakuten to find promo codes. Add and drop an item to your cart; Sometimes the company will email you with a special discount you can use.
Save more, spend smarter and grow your money
Net Income Formula: How to Calculate Net Income