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Yes, this is an unspoken facet of inflation it seems. Many goods are both increasing in price and decreasing in quality or quantity. You're getting less for you
by seneca 5y ago
Yes, this is an unspoken facet of inflation it seems. Many goods are both increasing in price and decreasing in quality or quantity. You're getting less for your money, but only the price increases are counted.
I'm curious if economists have a formal study of this.
- MacroChip 5y agoI assume that decreases in services will create decreases in goods. So GDP and CPI will reflect this.
- rurp 5y agoI've seen at least some of this effect covered by the term "shrinkflation", basically the concept of companies reducing quantities rather than increasing prices. Customers tend to be most sensitive to price changes, so we'll probably see more and more of these non-price inflation changes.
- sbelskie 5y agoThe CPI does have formal methods for attempting to account for this: https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm https://www.bls.gov/cpi/quality-adjustment/questions-and-ans... This can occasionally result in odd things, like when the introduction of unlimited cell phone data plans led core inflation to drop one month for first time in seven years: https://www.wsj.com/articles/BL-REB-37505 https://www.wsj.com/articles/BL-REB-37505