December 1, 2022

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It’s very tricky, actually – pronunciation

I learned the term “shrinkage” about 20 years ago when I was studying at the NHH in Bergen.

The term is made up of two words, “shrinkage” and “inflation,” and basically means mastering the art of offering the same price at a lower price.

If you don’t care too much about the price, this phenomenon is not so easy to find for the regular consumer. The carton, packet or bag in which various food items are packed suddenly becomes smaller while maintaining the price, making it easier to get through busy everyday life.

Stores know how to exploit it.

18 eggs turned into 12

NRK wrote on Friday About how Kiwi first raised the price of an egg carton with 18 eggs. Then the package shrunk to 12 eggs. In just a few months, the price of an egg has gone up by 74 percent.

Kiwi explains this by saying, among other things, that they have been selling eggs at artificially low prices for a long time and that selling at a loss over time is not sustainable ((Read Kiwi’s full response on the matter here).

Dor Wallin Andreasen, professor of economics at the Norwegian School of Economics, is unimpressed and believes that the aim is to make more money on the products sold, rather than informing customers that the products are in practice more expensive.

Very tricky, indeed.

Gets a chance

While we’re on the subject of stealth, it’s not uncommon for another well-known phenomenon to occur. When the public, the media, and politicians are clamoring for price hikes, yes, it’s easy for many retailers to take advantage of the opportunity.

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It’s completely impossible for people to find because everything is so expensive in price anyway.

We saw a good example earlier this week. Food prices have risen by more than 12 percent in a year.

Agricultural researcher Ivar Pettersen at ALO Analysis told NRK on Monday that they were surprised that prices were rising at all levels, but that prices were rising towards the consumer more than at the primary and wholesale levels. He says it is unusual.

What Peterson says is that stores are getting more expensive now than they were in the past.

Virke, for his part, disputes that — and says that grocery chains have very low margins and that the price hikes are all about increased costs.

Golden opportunity

Nevertheless, statistics show that shops are jumping in for no reason, seeing a golden opportunity. It can happen to others too Companies raise prices a little more than “necessary” when they first get the chance, and the environment is there to raise prices.

It’s easy to raise prices when everyone expects more price growth.

When that happens, it’s hard to reduce inflation: expectations of higher inflation gives High inflation.

Set car prices

The New York Times At the end of September, he pointed out that many companies were able to raise prices more than the cost increases of the past two years. This has improved profitability, but also contributed to higher inflation.

This is especially true in the car market.

Car dealers overcharge the cars they buy, but they buy Still Better pay for the cars they sell. They were able to do that because a lot of people wanted to buy cars and there weren’t enough cars to buy.

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Creates challenges

Price manipulation and larger-than-necessary mark-ups create more problems.

First, headline inflation is not captured in the Consumer Price Index. If many manufacturers choose to do this, the figures for price growth are now artificially low.

Then, for example, the decision-making basis for interest rate setting is at best accurate and at worst inaccurate.

Second, additional price increases will contribute to even higher price growth. To keep prices down, you should too expectation Reduce price inflation. It seems difficult to achieve when the sellers of the products set up a little extra and save themselves.

The shops’ opportunism may seem innocent, but at worst it could lead the central bank to set the key interest rate even higher – finally breaking the strong rise in prices.