I've been surprised at how little the official Consumer Price Index has risen since the onset of the tariffs. Part of this may be the result of companies eating some of the costs, but a more subtle effect is "shrinkflation" - a process that has been going on for decades as companies downside the size of products while holding the sticker price unchanged. Anyone who pays attention to their budget and shopping is aware of the process; hat this is accelerating is evidenced in this article in Reuters:
Toy makers that serve retail giants like Walmart, Target and Amazon are reducing the number of accessories in toy kitchen sets, removing batteries from electronic playsets, simplifying doll makeup and reducing packaging, as a 30% blanket tariff currently imposed on Chinese imports puts a damper on their bottom lines...Educational toy maker Popular Playthings - whose China-made animal sets, trucks, and magnetic food sets can be bought on Amazon - is delaying and paring down a magnetic cake set it had planned to launch in June, CEO Jason Cheung said in an interview. The company is reducing the power of the magnet, using cheaper packaging, and removing one of two serving plates that were to come with the set -- all while upping the price from $29.99 to $34.99."Originally it would come with two plates so two kids can have cake at the same time,” Cheung said. Now, "one (child) will serve, while the other can eat."
Time to cue Led Zeppelin "Tea For One."
As the number of historically non-partisan government organizations dwindles, when do we stop trusting numbers from the Bureau of Labor Statistics?
ReplyDeleteI've been worried about the same thing, smittypap, with regard to both the unemployment data and the inflation data.
Delete"Most economists in a July 11-24 Reuters poll, 89 of 100, said they were concerned about the quality of official U.S. economic data, including 41 who said they were "very concerned"."
Deletehttps://www.reuters.com/business/us-economic-data-quality-worry-authorities-not-acting-urgently-enough-experts-2025-07-25/
This explains a lot. Yogurt containers, cereal boxes, etc.
ReplyDeletehttps://tywkiwdbi.blogspot.com/2022/06/shrinkflation-and-price-dripping.html
ReplyDeleteI just opened a box of Zesta Saltines and laughed. There was 3 inches of box before the wrapped crackers.
ReplyDeleteI may have mentioned my coffee experience at Aldi's a few weeks ago? I bought two jars of instant coffee at a self sticker price was $2.89. the checkout clerk charged me $4.49. I complained, they checked the shelf sticker and gave me that price. I dropped off the coffee at my car and thought 'maybe i should get a couple more jars before they change...', went back, and they had already changed the sticker to the higher price.
ReplyDeleteShrinkflation has been ongoing for years. My posting from 2021 about aspirin, covers a couple of years before 2021:
ReplyDeletehttps://skeetmotis.blogspot.com/2021/11/a-tale-of-three-bottles.html A tale of three bottles
Don't worry - if the tariffs ever do go down (or go away), those companies will not reduce their 'tariff' prices or increase their 'tariff' quantities. Can you imagine an ad: "Now that tariffs are gone, we have reduced our price and increased the quantity!'?
ReplyDeleteImagine shrinkflation at the gas pump: the price at the pump is still $0.349, but you get 1/10th of a gallon.
ReplyDelete?? what in the world are you saying?
DeleteI mean that years ago, gas was $0.349 per gallon. With shrinkflation, the price at the pump still shows $0.349 but you get less gas for that price.
DeleteHmmm...
DeleteTariff stuff: https://www.marketwatch.com/story/this-chart-shows-how-prices-have-gone-up-because-of-trumps-tariffs-41f4e2fb?mod=home_ln
ReplyDeleteTo be fair, it might be something else....
ReplyDeleteTheoretically, with the tariffs, a country may be in the position of basically having far less products purchased from them...or eating some of the price increase in order to still make more than they would make if they simply passed along the tariff cost to American buyers.
We are in a new era, right now. It may be that there is fear that Trump will increase their tariffs if they raise prices. It may be that they hope for more favorable terms if they eat the tariffs.
Of course, it could be shrinkflation, too. But it just might be that Trump's tariffs are not having the horrendous effect on our economy has the Democrats prophesied...and hoped (sorry!).
And it might also be that much of what is now being sold was already in the pipeline...but in time the tariffs will indeed increase the cost of items. I cannot help but think, though, that Trump adds an element to the calculus that other presidents, if they raised tariffs, might not bring. Very simply, Trump plays hardball--perhaps far more than we we like--and that might be causing nations to take care that they don't rock the boat. Maybe?
Maybe. Time will tell.
DeleteWith all due respect, do you think shrinkflation is a recent thing? The only way a person could not have noticed it happening is if they haven't been buying their own groceries for the last 20 years. Do please quit trying to paint your country's pedo-in-chief as anything but a poorly-educated, amoral dictator.
DeleteAnon, I presume you meant to reply to the other Anon. I've been blogging about shrinkflation for years -
Deletehttps://tywkiwdbi.blogspot.com/2022/06/shrinkflation-and-price-dripping.html
Anyone doubting the impact of the trump tariffs is going to have to cool their jets until they actually go into effect in any meaningful way. This article demonstrates why he's earned the nickname TACO. The biggest impact thus far is the creation of a climate of uncertainty "the likes of which we've never seen". Running a business that operates in a global setting is likely maddening right now. Who can plan when the man's opinions thrash around like the 86 hairs on his head in a minor draft? He is clearly mentally unstable, and surrounded by bootlickers who are either profoundly ignorant, or interested only in their own position in the trumpian hierarchy. https://www.foxbusiness.com/politics/complete-timeline-trumps-tariff-implementation-strategy-across-globe
ReplyDelete