I remember it all started with ice cream.
I picked up a container and although the price was basically the same, the quantity had been reduced from half a gallon to 1.5qt. For my European friends that equates to a 25% reduction of product for the same cost. Although the price didn’t actually rise, the cost per unit rose an astonishing 25% overnight! This is the definition of “value inflation”.
Since that fateful day I have been noticing more and more instances of value inflation and it usually happens in the supermarket.
My favorite brand of hot dogs only have 7 units per package, although most bakeries still package 8 buns.
My favorite orange juice squeezed a full glass out of their typical package by reducing the typical 64oz bottle down to 58oz or less.
And in my opinion the entirety of Whole Foods participates in value inflation. If you look at something packaged like potato chips the cost of the bag is not overly expensive, but then you compare unit cost and realize that the bag at Whole Foods may be effectively 30% more expensive than your Wegman’s market based upon the price per ounce. (Health and Organics notwithstanding).
The scary thing is that the government continues to tell us that inflation is below 3%. We all know that the US Bureau of Labor Statistics (BLS) calculations do not reflect a true measure of how an average American spends his or her money. Their calculations on core inflation leave out major areas of expenditures such as food or energy.
To get a different and perhaps more accurate view of inflation check out the Chapwood Index which claims to measure actual real life inflation based upon approximately 4000 items and expenditures that Americans deal with every day.
You may be surprised to find your real rate of inflation to be closer to 10% and not the 2% that the BLS keeps telling us about.
Inflation is all around us. Some of it is obvious like taxes and healthcare but you also need to be aware of the hidden inflation especially at the supermarket. Value inflation is just as impactful to your bottom line even though it gets a lot less attention.