Sunday, May 23, 2010

Stealth Inflation

I was eating breakfast with my family at a nice little local restaurant on Saturday morning, when saw a headline in the Wall Street Journal proclaiming that inflation was at only one percent. And I had to shake my head.

That's preposterous. Gas prices are up and food prices are, well the same. But, and this may be part of what's missing in the figures, food quantities are down. A half-gallon carton of ice cream is no longer a half gallon, it's 56 ounces, or 12.5% less for about the same money. Burger King still has Chicken Tenders for a buck, but now four instead of five. And the Buck Double is the old Double Cheeseburger, less one slice of cheese.

And it's not just food. I recently bought a bottle of Ivory dish soap, the same height as the bottle I was replacing, and about the same price. But the old bottle was a quart, and the new one is 24 ounces.

Maybe I'm wrong and the powers-that-be have figured this in. Or maybe inflation includes housing prices which have fallen through the floor. But in either case it does not matter. Average folks like us are paying more and getting less.

We just don't always know it.

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