Edit: thanks to everyone especially those of you that have really detailed answers. I’ve learned a lot .
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Shrinkflation? Deflation?
The top comments are giving the correct official response but just like most other things it boils down to lies and corruption. The basket of goods and formula for calculating inflation are set up in a way to give the desired results.
That standard basket of goods doesn’t necessarily fit your own consumption. There are inflation calculators where you can adjust the basket. This is one for the EU f.ex. [https://www.euro-area-statistics.org/digital-publication/statistics-insights-inflation/bloc-4a.html](https://www.euro-area-statistics.org/digital-publication/statistics-insights-inflation/bloc-4a.html)
Plus, how does it account for rents doubling over a decade? Who decides what is in the basket?
All (most) inflation models are built by politicians to meet their goals. ie they are lies. Actual inflation(and/or currency debasement) have been running much higher than government data has reported. It just got way to high to hide (lie about) recently.
Inflation is 8% according to the metrics of the organization which caused the inflation.
It’s higher than 8%.
In addition to what others have written, keep in mind that shrinkflation usually happens all at once. So, ice cream stays at a half gallon for a decade, and Breyers (or whoever) has decided that the price shouldn’t go above $3.99. So after a decade at $3.99/half gallon, Breyers introduces a smaller, 1.5qt container at the same $3.99 price. To the consumer it’s “25% inflation”, but in reality it’s the first change in a decade, so it only averages 2.5% over that time period.
If they raised prices with inflation it would go $3.99, then $4.11 the next year, and $4.23 the following year, etc. But since the $3.99 price point is psychologically important, they keep the price there for years until jumping it all at once (or shrinking the package sizing).
It also usually happens when there’s a period of higher inflation that puts pressure on the manufacturers or growers, so everyone usually raises their prices all at once.
There are much more correct answers, but companies make sure their profit margins never go down, and this includes inflation.
I am hurting like many complainers. Hurting is too strong a word– there’s no war in my backyard, I own my home– I’m complaining like many complainers.
I’m legitimately good at budget shopping, buying loss leaders, clearance sales, distressed merchandise, rebates.
With product shortages, these sales just don’t have to happen to move product, so I pay retail. Retail may be up 8% but it’s a lot more up than what I’m used to paying.
Example: I got a set of Pirelli P4 tires for $50 apiece about 18 months ago. They went up to $120 (wow) and are back down to $90. Rough, but I think they were normally $80 back then and I just “got a deal.”
Every one is talking about a basket of goods and averaging it, which is part of the answer.
But I think the more important part of this answer is that you are forgetting causation. Inflation is something we measure and imagine as an abstraction for the economy. Where as the price of goods are the actual real world values (that we measure from). Inflation is then defined (caused by) the movement in prices (buying power) against money. As the saying goes, “correlation is not causation” because many things are correlated that don’t actually effect each other; this compounds with the way verbs work in English. The point I am trying to make clear is that inflation *doesn’t correlate prices to it* (inflation doesn’t act on prices, prices act on it), price changes are the *cause of inflation* by definition.
As for shrinkflation, that’s more of a long term thing, often over years or decades. But that’s how inflation happens in other years, where a jar of peanut butter might stay 2.99 for 3 years, but because of inflation over those three years they remove an ounce of it at some point, which would be ~2% inflation relative to the value of peanut butter (if it was originally 16oz).
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