STEALTH INFLATION: The Case of the Missing Sausage



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Doesn’t it really annoy you to discover that the manufacturer has reduced the weight of your favorite box of cookies or brand of coffee as a sneaky way of raising the price? This is truly stealth inflation This is a third party link. Please review the third party content guidelines by clicking here for more details.. But is it captured by the government’s official measures such as the Consumer Price Index This is a third party link. Please review the third party content guidelines by clicking here for more details. (CPI)?

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New “Value” Size

After downsizing the contents, they must spend millions trying to make the new container look as big as the old one. And if they do provide any warning — usually they don’t — it is some intentionally misleading phrase such as “new value package.”  That familiar “quart” jar of mayonnaise that my wife has been buying for years, now only contains 30 ounces. What used to be a five pound bag of sugar, now often appears in four pound package that looks an awful lot like the old one. A “gallon” jug of the leading chlorine bleach is now a considerably smaller 96 fluid ounces. I won’t even mention what a “pound” of coffee weighs.

 

I got really bugged just the other day when stealth inflation hit very close to home. In one of the chain stores, I chose what appeared to be a pound package of the store brand of Italian sausage that I had purchased before. It’s really quite good and the price seemed quite reasonable. When I got home and started to prepare my sausage and peppers grinder, I noticed that the label on the package said it only contained 14 ounces. This really annoyed me because it was outright deception. The sausage was nestled there among name brands that did indeed contain a true pound — for now, at least. And it looked very much like a pound.

 

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Less is More

Of course, these examples all amount to true inflation. Instead of (or maybe in addition to) marking up the price, they stealthily give you less for your money. One of the simplest definitions of inflation is when you pay more for the same thing. This becomes obvious when you calculate the new cost per ounce, pound or quart. Suppose that new, slimmer four pound bag of sugar costs $3.00 — the same as its heftier five pound predecessor. The true price has gone from 60 cents per pound to 75 cents — an inflation rate of 25 percent! My missing two ounces of spicy Italian sausage was a more modest 15 percent covert price increase.

 

A short while ago, I was doing a telephone interview from my office on a morning radio show, when the host brought up this very topic. He’s a very smart guy and he’d interviewed a guest who said that this type of what I’ve called stealth inflation is not captured by the official Consumer Price Index (CPI). If this person was correct, then the inflation rate would be higher than the 2.9 percent CPI increase recently reported for the past 12 months (through February). I responded that I thought the guest was wrong and that this type of sneaky price increase captured in the CPI.

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Is Anyone Watching?

We ran out of time to discuss the matter further and I immediately turned to my computer to check whether I was actually correct. The U.S. Labor Department’s Bureau of Labor Statistics This is a third party link. Please review the third party content guidelines by clicking here for more details. is the gatherer and keeper of the CPI and lots of other numbers such as the unemployment rate. You can peruse a plethora of data and technical reports at BLS.gov This is a third party link. Please review the third party content guidelines by clicking here for more details.. Sure enough, those sneaky supermarkets and food manufacturers aren’t deceiving the vigilant statisticians in Washington. In gathering data for the CPI, they calculate the cost per ounce or other appropriate unit of measurement. BLS used the example of the shrinking candy bar whose weight had gone from 1.5 ounces to a mere 1.0 ounce but the price remained the same at 75 cents. Of course, our Washington watchdogs would log this in as a 50 percent price hike!

 

Next time you shop for food, keep your eye on the weight. But relax a bit. The BLS is watching too!