By now we are all familiar with the way inflation makes us poorer day by day. Anyone who has been to the grocery store lately is familiar with how much everything costs now compared to a year or two ago.
You may already have become wise to "shrinkflation" too. That is the sneaky way companies raise prices on you by holding the cost the same but putting less and less product in the package. Everything from breakfast cereal to toilet paper has gotten smaller while prices have stayed the same or even gone up. Or how my chocolate chip cookies suddenly went from 16 per box to 12.
But have you heard of the latest trick that companies, especially food producers, have been playing to get more of your money for less of what you buy with it?
It is called "skimpflation" and it is the substitution of cheaper of fewer ingredients for more expensive ones. An example is Conagra reducing the fat content in its Wish-Bone House Italian Dressing by 10%, replacing it with additional salt and... water. Yes, water. The most egregious example seen recently was in October 2022, when Conagra reduced the amount of fat in its dairy-free Smart Balance spread from 64% to 39%, which meant water became the most plentiful ingredient in the product.
One reason that companies are turning to skimpflation to deceive you is that they aren’t under any obligation to announce when they make changes to their recipes (as long as all the ingredients are accurately reflected on the label).
And skimpflation in not new. In 2013, Breyers was forced to legally change the labeling of its products from ice cream to “frozen dairy dessert.” Why? Because the company had reduced the amount of dairy fat in its product to the point that it didn’t legally qualify as ice cream anymore.
Don't think that skimpflation is limited to things you find at the grocery store, it is everywhere. Any time that a company lowers the quality of its product or service to same money (aka, make a greater profit) that is skimpflation. Some other examples include:
- Airlines reducing the number of air stewards and therefore giving consumers less service during a long haul flight.
- Phone companies reducing the number of workers in call centers so that
when you try to call with a technical problem, it takes longer to get
through - if you get through at all. (Your call is important to us! Please hit one if you would rather have a callback from us that you will never receive or just stay on the line for 45 minutes till we get to you. After all, your call is important to us!)
- Hotels not providing waiter service, but relying on customers to do self-checkouts for breakfast and meals. Or asking you to help "save the planet" by not having your sheets changed.
- Disney World and Disneyland have eliminated their tram services to and from parking lots, forcing visitors to walk nearly a mile to enter and exit the parks.
We should note that not all companies are motivated by greed or disingenuousness. Many businesses, especially small businesses, are struggling to cope with the surging costs of regular, old fashioned inflation. They're having a hard time finding workers at the wages they used to pay. And some businesses may be unable to afford paying what it takes to recruit workers in the current environment. Nonetheless, whether it's because they can't afford to, they don't want to or they're being greedy, instead of enticing workers with higher wages, many businesses are cutting back on the quality of their services in order to stay profitable.
The bottom line is that real inflation, the kind you see on your credit card statements, is much higher than the figure reported by the government suggests.