As inflation continues to dominate the headlines, you may have started to hear about the concepts of shrinkflation, skimpflation and greedflation. These are subtle ways in which companies attempt to either minimize or take advantage of the impact that inflation has on consumer expectations.
It’s important to understand these concepts in order to avoid being manipulated. Let’s take a look at each one in a little more detail.
What is Shrinkflation?
The traditional concept of inflation refers to paying more than you would previously for the same item. The concept of shrinkflation refers to paying the same amount as you were before, but receiving a smaller size.
For example, let’s say you paid $5 for an 18-ounce jar of peanut butter last year. But now, you’re paying $5 for a 15-ounce jar of peanut butter. While the final price hasn’t changed, you’re receiving less than you were before.
Shrinkflation is often harder to spot than traditional inflation because it’s difficult to compare size changes unless you remember how much you used to get. If you don’t remember that a jar of peanut butter used to contain 18 ounces, you might not realize that you’re effectively paying more now.
What is Skimpflation?
Have you had a meal at a restaurant where the food wasn’t as good, but the prices were the same or higher? Have you bought an article of clothing only to discover the quality isn’t as good as it used to be? If so, you’ve definitely experienced skimplfation.
Skimpflation can refer to businesses keeping prices the same, but downgrading the overall customer experience. For example, many businesses that offer free shipping have switched to longer processing and shipping times. Businesses will utilize skimpflation to avoid raising prices and losing customers while still meeting their revenue goals.
What is Greedflation?
Even as crude oil prices have started to drop, many consumers have yet to see a dip in overall gas prices. This has caused some experts to accuse gas companies of “greedflation,” which refers to the practice of increasing prices even though underlying costs have not increased.
Greedflation is a way for companies to take advantage of inflation and use it to increase their prices when they don’t actually need to do so. It can also refer to companies raising prices more than necessary to exploit their customers. Because consumers know that prices are rising due to external factors, they expect that companies will increase their rates.
How to Combat All Types of Inflation
As inflation continues to be a powerful force in the economy, consumers need to know how to save money at any and every opportunity.
Not all businesses engage in the types of inflation mentioned above, but you’ll have to look closely to find companies that aren’t trying to exploit customers.
Try to shop around as much as possible and compare prices from all businesses and services, from your hair salon to your mechanic. Always ask if there are any discounts or coupons available.
Research costs beforehand
During periods of high inflation, businesses often raise prices without informing customers. You may not even discover a price increase until it’s time to pay.
To save money and watch out for various signs of inflation, you should research prices ahead of time. For example, if you’re planning an evening out, look at the online menus ahead of time so you know what to expect.
Shop in bulk
Buying in bulk from warehouse clubs can be an easy way to save money and fight inflation. To maximize your savings, only purchase items that will not go bad before you can use them. Canned items, frozen produce and dry goods will last longer than a two-pack of Greek yogurt or milk, for example.
Some warehouse clubs have their own credit card that offers cash back when you shop, allowing you to save even more money.
Also, many warehouse clubs sell gas for less than what you would pay at a regular gas station. You can fill up the tank while you stock up on groceries and get extra savings. Pharmacies at warehouse clubs like Costco often have lower prescription drug prices than drugstores, so you can get medicine for less as well.
You can also shop in bulk at stores like Whole Foods, where they sell legumes, grains and spices in bulk. This lets you save money on packaging while only buying as much as you need.
Look at unit prices
If you’ve always compared item prices to determine which is cheaper, you should start using the per-unit price. The per-unit price divides the total cost by the amount, usually in ounces or grams. It’s the most accurate way to compare two different items.
You may be surprised with what you find when you start doing this. Most of the time, the larger item has a lower per-unit price than the smaller item. However, if the smaller item is on sale, then it may be cheaper.
Check the unit price every time you shop, even if you’re buying the same thing you did last week. You never know when prices might change.
Utilize all possible discounts
These days, there are many ways you can pay less than retail price – but you have to be diligent and creative.
Sign up for email newsletters to get discounts for new customers. Use browser extensions like Rakuten to find promo codes. Add an item to your cart and leave it; sometimes the company will email you with a special discount you can use.