Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

What is shrinkflation, skimpflation and stagflation?

What is shrinkflation, skimpflation and stagflation?

Have you been out to your favourite restaurant, only to discover the food wasn’t quite as good or the portions were much smaller? Or even eating at home has become more expensive as the supermarket shop adds up?

You may have also just discovered that your Amazon Prime membership is about to get a little more expensive and if you are in the United Kingdom, a McDonald’s cheeseburger is also going up for the first time in more than 14 years.

The feeling that everything is just a little bit worse and perhaps more costly is not unfounded with the blame largely being placed on inflation.

But what exactly is it and the other terms that are being waved around, such as shrinkflation, skimpflation and stagflation?

Euronews Next breaks down what exactly these words mean.


Inflation


Many countries are dealing with the effects of inflation, now at a 40-year high. What that means is that you get less bang for your buck and you are now getting even less value on goods.

Basically, prices go up when there are shortages and/or there is a large demand for goods or services.

The most current example is Amazon choosing to raise the cost of its Prime membership, a decision it blamed on inflation.

Inflation is measured by how expensive goods and services have become over a certain period of time, usually a year. One well-known indicator is the Consumer Price Index, which measures the percentage change in the price of a basket of goods and services consumed by households.

Moderate inflation is considered normal but significant spikes can mean the cost of living can suddenly become much higher.

The feeling that everything is just a little bit worse and perhaps more costly is not unfounded with the blame largely being placed on inflation.


The reason why inflation is so high at the moment is due to a perfect storm of economic woes as the International Monetary Fund (IMF) on Tuesday dubbed the world’s economic outlook “gloomy and more uncertain”.

Many have blamed the world's financial problems on the impact of Russia’s invasion of Ukraine, which has consequentially ramped up petrol and food prices and seen shortages of staple goods.

But even before the war in Ukraine broke out in February, the coronavirus pandemic meant factory shutdowns and also logistical hurdles in export hubs such as China causing supply chain issues and shortages. This ramped up the prices of goods and the cost to transport them.


Shrinkflation


If you are a Swiss chocolate fan, you may remember when Toblerone in 2016 looked a bit different; it no longer resembled the Alps and had the gaps between triangles widened.

File- More valleys, fewer chocolate peaks


While the cost of the chocolate bar did not go up, it shrank from a net weight of 170 grams to 150 grams.

This is a classic case of what is called “shrinkflation,” when the volume or size of a product shrinks.

It can be seen as a little more sneaky, as consumers are less likely to weigh a product and notice the difference compared to a price hike.


Skimpflation


“Skimpflation” on the other hand is when companies “skimp” on the quality of the product or service.

One of the main reasons this happens is because companies cut back on the quality of the service so it can still be profitable, meaning less money for staffing or materials are cut back on.


Recession


If stagflation is defined as a recession accompanied by inflation, then it is important to know what a recession is.

While the word can cause alarm, recessions are a natural part of the economic cycle. A recession is defined by two successive quarters having contracting gross domestic product (GDP) results.

But issues arise if low growth is combined with unemployment or high inflation, in what is known as stagflation, which is much rarer.


Stagflation


Another word being floated around at the moment is “stagflation”. As the name suggests, everything remains stagnant and does not move much.

In economic terms, it means high inflation, economic stagnation and high unemployment at the same time. Stagflation can happen if there is a recession before the rate of inflation has gone down to where central banks want it to be.

Many countries are dealing with the effects of inflation, now at a 40-year high.


The term is said to have been widely used in the 1970s after a recession in the US hit hard and was accompanied by inflation.

The period of stagflation in the 1970s and 1980s saw several recessions and weak economic growth. It ended after the US’s national bank, the Federal Reserve, raised interest rates to curb inflation.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
×