Beautiful Virgin Islands

Friday, Jan 27, 2023

What is shrinkflation, skimpflation and stagflation?

What is shrinkflation, skimpflation and stagflation?

Have you been out to your favourite restaurant, only to discover the food wasn’t quite as good or the portions were much smaller? Or even eating at home has become more expensive as the supermarket shop adds up?

You may have also just discovered that your Amazon Prime membership is about to get a little more expensive and if you are in the United Kingdom, a McDonald’s cheeseburger is also going up for the first time in more than 14 years.

The feeling that everything is just a little bit worse and perhaps more costly is not unfounded with the blame largely being placed on inflation.

But what exactly is it and the other terms that are being waved around, such as shrinkflation, skimpflation and stagflation?

Euronews Next breaks down what exactly these words mean.


Inflation


Many countries are dealing with the effects of inflation, now at a 40-year high. What that means is that you get less bang for your buck and you are now getting even less value on goods.

Basically, prices go up when there are shortages and/or there is a large demand for goods or services.

The most current example is Amazon choosing to raise the cost of its Prime membership, a decision it blamed on inflation.

Inflation is measured by how expensive goods and services have become over a certain period of time, usually a year. One well-known indicator is the Consumer Price Index, which measures the percentage change in the price of a basket of goods and services consumed by households.

Moderate inflation is considered normal but significant spikes can mean the cost of living can suddenly become much higher.

The feeling that everything is just a little bit worse and perhaps more costly is not unfounded with the blame largely being placed on inflation.


The reason why inflation is so high at the moment is due to a perfect storm of economic woes as the International Monetary Fund (IMF) on Tuesday dubbed the world’s economic outlook “gloomy and more uncertain”.

Many have blamed the world's financial problems on the impact of Russia’s invasion of Ukraine, which has consequentially ramped up petrol and food prices and seen shortages of staple goods.

But even before the war in Ukraine broke out in February, the coronavirus pandemic meant factory shutdowns and also logistical hurdles in export hubs such as China causing supply chain issues and shortages. This ramped up the prices of goods and the cost to transport them.


Shrinkflation


If you are a Swiss chocolate fan, you may remember when Toblerone in 2016 looked a bit different; it no longer resembled the Alps and had the gaps between triangles widened.

File- More valleys, fewer chocolate peaks


While the cost of the chocolate bar did not go up, it shrank from a net weight of 170 grams to 150 grams.

This is a classic case of what is called “shrinkflation,” when the volume or size of a product shrinks.

It can be seen as a little more sneaky, as consumers are less likely to weigh a product and notice the difference compared to a price hike.


Skimpflation


“Skimpflation” on the other hand is when companies “skimp” on the quality of the product or service.

One of the main reasons this happens is because companies cut back on the quality of the service so it can still be profitable, meaning less money for staffing or materials are cut back on.


Recession


If stagflation is defined as a recession accompanied by inflation, then it is important to know what a recession is.

While the word can cause alarm, recessions are a natural part of the economic cycle. A recession is defined by two successive quarters having contracting gross domestic product (GDP) results.

But issues arise if low growth is combined with unemployment or high inflation, in what is known as stagflation, which is much rarer.


Stagflation


Another word being floated around at the moment is “stagflation”. As the name suggests, everything remains stagnant and does not move much.

In economic terms, it means high inflation, economic stagnation and high unemployment at the same time. Stagflation can happen if there is a recession before the rate of inflation has gone down to where central banks want it to be.

Many countries are dealing with the effects of inflation, now at a 40-year high.


The term is said to have been widely used in the 1970s after a recession in the US hit hard and was accompanied by inflation.

The period of stagflation in the 1970s and 1980s saw several recessions and weak economic growth. It ended after the US’s national bank, the Federal Reserve, raised interest rates to curb inflation.

Newsletter

Related Articles

Beautiful Virgin Islands
Close
0:00
0:00
Tesla reported record profits and record revenues for 2022
I have a dream, MLK inspiring speech
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Aretha Franklin, Marvis Staples - Oh Happy Day
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
BVI Freedom Song
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Billy Preston - You Can't Beat God Giving (Live)
Who’s Threatening Israeli Democracy?
VIRGIN ISLANDS REGGAE CARIBBEAN RIDDIMZ
Federal Reserve Probes Goldman’s Consumer Business
Oh Happy Day Edwin Hawkins - Anthony Brown w FBCG Combined Choir
China's first population drop in six decades
'Stand by Me' performed by Karen Gibson and The Kingdom Choir
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
National Anthem of the British Virgin Islands - Oh, Beautiful Virgin
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Hello Dolly
Tesla slashes prices globally by as much as 20 percent
for KING & COUNTRY - Amen (Reborn) [feat. Lecrae & The WRLDFMS Tony Wi
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
Bob Marley - Get Up Stand Up
After Failing To Pay Office Rent, Twitter May Sell User Names
Yes He Can
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
What A Friend We Have In Jesus
FIFA president questioned by prosecutors
Unforgettable
Britain's Sunak breaks silence and admits using private healthcare
Touch The Hem Of His Garment
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
The Lord's Prayer
Saudi Arabia set to overtake India as fastest-growing major economy this year 
THE GOD MOVEMENT...BEAUTIFUL BVI
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
Siyahamba
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
Ray Charles And The Voices Of Jubilaton, Oh, Happy Day
TikTok CEO Plans to Meet European Union Regulators
Ramblin' Rose
UK chaos: Hong Kong emigrants duped by false prospectus
Protoje - Who Knows ft. Chronixx
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Pressure - Virgin Islands Nice
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Phil Wickham - House Of The Lord
Will Canada ever become a real democracy?
My God Is Real (Yes, God Is Real)
Hong Kong property brokerages slash payrolls in choppy market
The Lion King Circle of Life by LEBO M. — LIVE at the HAVASI Symphonic
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Louis Armstrong - When The Saints Go Marching In
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Kanye West Sunday Service - hallelujah, salvation, and glory
Coinbase to Pay $100 Million in Settlement With New York Regulator
Jonathan Nelson - I Believe (Island Medley
FTX assets worth $3.5bn held by Bahamas securities regulator
From The Virgin Islands Sqad Up
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Common, John Legend - Glory
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Anthony Evans vs. Jesse Campbell - If I Ain't Got You
Hong Kong to scrap almost all its Covid rules
I have a dream, MLK inspiring speech
EU calls screening of travellers from China unjustified
Aretha Franklin, Marvis Staples - Oh Happy Day
US imposes Covid testing for visitors from China
BVI Freedom Song
×