You’re probably sick of paying more for groceries and gas, but did you know that you might actually be getting less than what you’re paying for? With inflation comes “shrinkflation,” the practice of companies shrinking a product’s size to offset rising costs. The changes may be small, but it means you could be paying more for less product and not even know about it. The average consumer “can tell instantly if they’re used to paying $2.99 for a carton of orange juice and that goes up to $3.19,” consumer advocate Edgar Dworsky told NPR. “But if the orange juice container goes from 64 ounces to 59 ounces, they’re probably not going to notice.” So, keep an eye out the next time you’re at the store. In other news, central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year.
Beware Of ‘Shrinkflation,’ Inflation’s Devious Cousin
A couple of weeks ago, Edgar Dworsky walked into a Stop & Shop grocery store in Somerville, Mass., like a detective entering a murder scene.
He stepped into the cereal aisle, where he hoped to find the smoking gun. He scanned the shelves. Oh no, he thought. He was too late. The store had already replaced old General Mills cereal boxes — such as Cheerios and Cocoa Puffs — with newer ones. It was as though the suspect’s fingerprints had been wiped clean.
Then Dworsky headed toward the back of the store. Sure enough, old boxes of Cocoa Puffs and Apple Cinnamon Cheerios were stacked at the end of one of the aisles. He grabbed an old box of Cocoa Puffs and put it side by side with the new one. Aha! The tip he had received was right on the money. General Mills had downsized the contents of its “family size” boxes from 19.3 ounces to 18.1 ounces.
Dworsky went to the checkout aisle, and both boxes — gasp! — were the same price. It was an open-and-shut case: General Mills is yet another perpetrator of “shrinkflation.”
Dworsky is a former Massachusetts assistant attorney general and longtime consumer advocate. He has spent decades tracking instances of companies shrinking products on his website Mouseprint.
He refers to it by its original name, downsizing, but economist Pippa Malmgren rechristened it “shrinkflation” about a decade ago, and the term stuck. Downsizing and shrinkflation both refer to the same thing: companies reducing the size or quantity of their products while charging the same price or even more.
You can read the full article, here.
Bloomberg via Yahoo Finance/Ranjeetha Pakiam, Misha Savic and Eddie Spence
Gold Regains Shine After Central Bank Buying Drops to Decade Low
Central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year.
Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases, as the specter of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases. A rebound in buying — which had dropped to the lowest in a decade — would bolster the prospects for gold prices as some other sources of demand falter.
“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,” said the National Bank of Serbia. Serbian President Aleksandar Vucic recently announced the central bank intends to boost holdings of the precious metal to 50 tons from 36.3 tons.
Bullion has come under pressure this year as higher bond yields made the non-interest bearing haven seem less attractive to investors. After recovering in April and May, gold fell by the most in more than four years last month as the Federal Reserve turned more hawkish and the dollar strengthened.
The recovery in global trade is bolstering the current accounts of emerging market nations, giving their central banks the option of buying more gold. Higher crude prices are also boosting bullion purchases by oil exporters, including Kazakhstan, according to James Steel, chief precious metals analyst at HSBC Holdings Plc. That’s likely to continue, he said.
“If a central bank is looking at diversifying, gold is a marvelous way of moving out of the dollar without selecting another currency,” he added.
The precious metal rose 0.3% to trade at $1,791.85 an ounce as of 2:15 p.m. New York time. It’s now trading around its 100-day moving average, a key technical level.
Continue reading the full story, here.
Inflation a ‘risk’ to economic recovery: Former Fed official
Former Federal Reserve Board nominee Judy Shelton argues rising inflation and inaction from the Fed will keep the economy from fully recovering.
Watch the full video, here.