Does it count as inflation that products are getting smaller?

Question

Instead of raising prices, many companies make their products smaller, so they can charge the same price for a smaller product. But that often means that you have to buy more of the product to get the same amount as before; so you're still spending more money for the same product. Does that count as inflation for the official inflation index? Or is it hidden inflation that isn't officially tallied?

I ask because it sure seems like things are getting more expensive, yet the official inflation index isn't particularly high.

Answer 1

The inflation basket is calculate in price per measurement unit (i.e. lb or square foot)......So if a product went from $1/lb to $1/ half lb; yes, it would be picked up in the inflation numbers.

Answer 2

The only time I saw this was back in the 70's during the wage price freezes. The government mandated that wages and prices were frozen at the then current level. The result was shortages of some products, and a flood of "New and Improved" products which could skirt the wage price freezes. There was also a rash of smaller candy bars ect. at the same old price.

I agree with the other answer. The inflation index is based on cost per unit. Not cost per container.

The official inflation index doesn't seem too high because it is annualized so that you are only looking at the rate of inflation not the total inflation. It compounds like interest so that over a few years it grows quite a bit.

Answer 3

I've heard of this happening with chocolate bars to maintain the same price, but I've never noticed any other real example of it. I'd say that for every case of something shrinking, there must be a dozen cases of things getting bigger. I mean that's kind of why we Americans are notoriously fat.

The person above citing hamburger patties getting smaller seems ridiculous. Hamburger patties have been getting bigger, and they've been stacking more of them on the buns; the small bag of French fries has become a massive tub of French fries; and the small paper cup of coke has become a super-sized big gulp. Bottles of coke have gone from 8 oz to 12 oz to 16 oz to 20oz. You can't buy a freakin' Coke at 7-11 anymore without taking in 400 calories.

Some people seem to be hardwired to look for inflation. Personally I constantly notice how many things get cheaper, or dramatically better in quality, or often enough both at the same time. I remember paying $350 for a 13-inch TV; $60 for an iron inferior to what you can get today at Target for $15; $50 for an electric razor inferior to one I recently bought for $12. Just in the last couple years I've seen the price of my favorite healthy frozen entrees fall by half, of my chocolate soy milk fall in half; of my soft drinks fall by maybe 40%. Virtually everything that runs on electricity is much cheaper than it used to be.

Answer 4

It's referred to as "down sizing" and has been going on for years. From the size of a hamburger patty at your local fast food chain to the ounces of your favorite spaghetti sauce. It is one way for companies to keep prices seemingly level and frankly most people don't notice it as the packaging appears the same. I don't think it is figured anywhere in the inflation index...or on any list anywhere...can you imagine what would happen if it was? Then maybe the reality of the current economy would be revealed at last...and who suffers the most? the poor and middle class as always...

Answer 5

Watch is better than clock