How 'Skimpflation' Is Driving Perceptions of Price Increases

It's not just that prices are going up, it's that companies are giving consumers less for what they pay. The reasons have to do with supply chain challenges, labor shortages - and the perception that consumers are flush so can afford to pay more - or won't minding paying the same for less. 

The question is whether the combination of actual price increases and content decreases will eventually cause a reduction in demand. JL

The Hustle reports:

Skimpflation is when, “instead of raising prices, companies skimp on the goods and services they provide." It is when the price of stuff stays the same, but the amount you get goes down (e.g., the ever-growing amount of air in a bag of potato chips). If you’ve noticed the drive-thru taking longer than usual lately, you aren’t alone. Other examples include: Domino's taking longer to deliver pizzas and airlines leaving customers on hold for longer than usual. Businesses are facing challenges including supply chain issues increasing the cost of goods and labor shortages.

Inflation just reached a 30-year high, and might be even higher thanks to ‘skimpflation’

There are a few ways to spot inflation, including: Classic inflation: when the price of stuff goes up (e.g., when your favorite item moves off the dollar menu) Shrinkflation: when the price of stuff stays the same, but the amount you get goes down (e.g., the ever-growing amount of air in a bag of potato chips) It’s time to add another to the list. Coined by NPR’s Greg Rosalsky, “skimpflation” is when, “instead of simply raising prices, companies skimp on the goods and services they provide." Skimpflation is everywhere If you’ve noticed the drive-thru taking longer than usual lately, you aren’t alone. Other examples include: Disney disabling its tram at Disneyland Domino’s taking longer to deliver pizzas Airlines leaving customers on hold for longer than usual In many cases, the skimping isn’t deliberate -- some businesses are facing a perfect storm of challenges right now, including: Complications stemming from COVID-19 Supply chain issues increasing the costs of goods Labor shortages leaving businesses short-staffed Shifting services from human to digital can lead to skimping as well In his newsletter, Kneeling Bus, Drew Austin described a recent trip to CVS, where he noticed the following cycle: Most items are locked in cases to avoid theft The rise of self-checkout means fewer employees work at a time Finding someone to unlock the case can make the trip take 3x as long Austin sees one road that this all leads to: Amazon Prime.