Posted Feb 9, 2022 by Martin Armstrong
Shrinkflation is here to stay now that inflation has reached a 39-year high. It will be impossible for the Fed to tame the monster politicians have unleashed by COVID restrictions, not artificially lowering rates that have been in place for over a decade. Political governments could take immediate action to help the current supply chain crisis which they created, but they lack any competence to understand even what they have done. Shrinkflation, by the way, occurs when products remain the same price or rise, while the product size decreases.
“Portion sizes are shrinking. Prices are going up. It’s just insane what’s happening in the restaurant industry,” former McDonald’s USA CEO Ed Rensi told Fox News. “It’s also true of every other small business. They’re all suffering terribly from this federal inflation.” Yet, McDonald’s saw 7.5% growth in Q4 2021. Regardless, the fast-food giant is recommending that franchises raise their costs between 6% to 6.5% next year.
“The biggest single problem we’ve got is the…truckers shortage and a disruption of imports coming into this country,” Rensi added. “This truckers’ situation is enormous and is having a big impact.” So while the jobs situation is improving, with the US boasting a 4% unemployment rate, the mandates have devoured the supply chain.
As for other examples of shrinkflation, Chobani decreased its flip yogurt by 15% in size. Crest decreased its whitening toothpaste from 4.1 oz to 3.8 oz, while Gain decreased its laundry detergent from 165 FL OZ to 154 FL OZ. Inflation is so severe that products are increasing in price while shrinking in many instances. Barilla pasta formerly sold its spaghetti for under a dollar at 454 g, yet decreased the package to 410 9 and increased the price by nearly 100%. This level of inflation is completely unsustainable and consumers are suffering the consequences.
As former CEO Rensi said in his insightful interview, “Let’s lighten up a little bit, let our bodies handle it, instead of government handling it.” End the mandates to help boost the suffering supply chain that is contributing to inflation. This is one variable that the government has instant control over.