In recent months, new economic terms have emerged in our daily lives, shedding light on different facets of inflation. These include terms such as chipflation, gridflation, shrinkflation, skimpflation and excuseflation, all representing variations of inflation in the market. But what do these terms mean?
Gridflation
Gridflation, also referred to as “greedflation,” highlights the role of business profit increases in driving inflation during the post-pandemic period. While factors like disruptions in global supply chains, heightened demand fueled by accumulated savings during the pandemic, and rising global energy and agricultural prices have all contributed to inflation, gridflation suggests that businesses have also raised their prices due to a desire to increase profits across the production and supply chains.
Excuseflation
Excuseflation refers to the practice of companies justifying price hikes by citing inflationary pressures, even if the price increases exceed the actual rise in costs. This phenomenon takes advantage of the inflationary climate to push prices higher, sometimes beyond the cost increases experienced by companies.
Shrinkflation
Shrinkflation is a term that has gained significant attention, referring to the practice of reducing the quantity of a product while keeping the price the same. Manufacturers often use this strategy to avoid the negative backlash of raising prices, while still benefiting from higher profits. This can be seen when products maintain their usual price point, but the quantity in the package is smaller, signaling inflation without a visible price increase.
Skimpflation
Skimpflation is a more subtle form of inflation. It involves reducing the quality and availability of products and services while maintaining the same price. This is harder to track through traditional inflation measures because the decline in quality is not always immediately obvious. Consumers may not realize that the product they’re purchasing is of lesser quality than before.
Chipflation
Chipflation is a newer term that refers to the rising costs associated with semiconductors, which have become crucial in various industries, from electronics to automobiles. As the demand for chips outpaces supply, prices increase, contributing to overall inflation in sectors relying on this technology.
Cheapflation
Recently, the term cheapflation has been coined to describe the phenomenon where the prices of cheaper brands rise faster than those of more expensive brands during inflationary periods. A study showed that, over three years, the cheapest brands of certain products saw price increases of around 40%, while the most expensive brands rose by about 35%, highlighting the impact of inflation on budget-friendly options.
These new terms capture the complexity of modern inflation, as companies adopt various strategies to deal with rising costs while minimizing negative reactions from consumers. Each term represents a unique way that inflation is being experienced, indicating that the economic landscape is evolving in response to both global and local economic pressures.
