We’ve been talking a lot about rising prices. The CPI has come in hotter than expected every month this year. We’re paying more to buy less.
We see the impacts of inflation on price tags, but sometimes it squeezes us more subtlety. It’s known as “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. A lot of companies have been doing this of late. Chipotle is just one example.
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. Consumers rail against this practice, but economist Doug French suggests their anger may be directed in the wrong place. Perhaps they should blame the Fed.