Hidden Inflation Metrics Come To Light, Expose Economic Realties

According to government figures, inflation is coming down, employment remains strong and all is right with the world.

Except there’s a long-standing problem with the way Uncle Sam measures inflation. Or thought of another way, the problem with the government’s inflation data is it doesn’t measure “shrinkflation.”

According to Investopedia, shrinkflation:

…is basically a form of hidden inflation. Companies are aware that customers will likely spot product price increases and so opt to reduce the size of them instead, mindful that minimal shrinkage will probably go unnoticed. More money is squeezed out not by lifting prices but by charging the same amount for a package containing a little bit less.

You’ve probably run into all sorts of examples of shrinkflation – from the increasingly large air pocket at the top of a bag of potato chips to a “pound” of coffee that’s really a 12-ounce bag.

As The Wall Street Journal’s Allysia Finley writes, shrinkflation is no longer restricted to the grocery aisle. It’s showing up all over the place:

Consider video streaming services, most of which have been losing money. Several increased prices last fall by around 20%. Disney+’s ad-free service rose from $11 a month to $14. Yet the [Consumer Price Index] shows that prices for video subscription services have risen a mere 2% over the last year. How can that be?

Streaming services have recently introduced lower-cost plans with ads. If you don’t want to pay more, you will have to suffer through commercials. Shrinkflation has even come for your Amazon Prime account. The company on Jan. 29 began charging an extra $2.99 a month—or $35.88 a year, a 20% premium over a standard Prime subscription—to stream movies and TV shows without ads.

But wait…we’re told – even harangued – that inflation is no longer a bogeyman, you’re brainwashed if you think prices are too high, and shame on you for not dutifully singing “happy days are here again.”

That’s the general thrust of Paul Krugman’s column on our better-than-Goldilocks economy:

As typically happens when there’s a Democrat in the White House, the usual suspects are questioning the official data. But the strength of the job market and the fall in inflation are confirmed by many independent surveys of consumers and businesses.

We can always count on Mr. Krugman to dismiss critics as partisan hacks. Your car insurance went through the roof? Too bad for you. It doesn’t really show up in official government inflation data so…did it even happen?

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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