We all know that a 1.3 percentage rise on your pension check is not going to cover the rising cost of inflation. After all inflation just rose over 3% in Canada and your oas pension check got a raise of just over 1%. Now there is a new beast let loose and it is called ShrinkFlation!
What this beast does is shrink your food supply packaging. That ice cream for example you enjoy so much has been cut by almost half over the last decade. Believe it or not you are about to take a double hit. Not only has the packaging shrunk they are raising the prices due to inflation on these shrinking packaged products. Sneaky are they not these corporate giants.
Instead of a dramatic raise in prices to cover their shrinking profits they simply shrink the packaging and put less in it. Of course they hope you don’t notice because they do it over time and it is hard to detect. Maybe you might have noticed that those coco puffs don’t go as far as they used to. This is going to hit consumers hard over the coming months eating up there already dwindling monthly spending power.
Spending Power Shrinking Fast
This is especially going to hit seniors on a fixed income hard. Already housing is running out of control and now it seems food is about to do the same thing. Let’s face it a senior can always get rid of his car due to high gas prices but what about food? No one can do without food and if you have to cut back it means eating cheaper more riskier products. What this means is a coming health crisis is also looming in the years ahead. As more and more seniors turn to cheaper fast food the risk of diabetes and obesity rise.
This is not good for the health of our seniors and will cause an epidemic surge in the baby boomers life span deteriorating. Of course seniors will not want to compromise by eating cheap food and ones with assets will be selling them to raise cash. What assets will they be selling? Stocks!
Spending power is going to be hit hard in the coming months and no senior want’s to live in poverty. Baby Boomers have been the most spoiled generation in history and they like there cash. Housing is the no. 1 priority for seniors and it is hard to imagine they will be selling there homes. So what else do they own? Trillions and trillions of dollars in the stock markets. What is going to cause this sell off? The coming Inflation,shrinkflation that is going to hit hard.
Shrinkflation is the process of items shrinking in size or quantity, or even sometimes reformulating or reducing quality while their prices remain the same or increase. What the definition means is a crazy mixture of rising cost’s and shrinking products. The less for more mess as I like to put it. All this combined with shrinking pensions!
General Mills had downsized the contents of its Cerial boxes from 19.3 ounces to 18.1 ounces. Now this doesn’t sound like much but the genie has been let out of the inflation box and it will be hard to get back in. It cost’s these companies a considerable amount of money to shrink these boxes. Do you really think they are going to start making them larger anytime soon. With looming food shortages on the horizon due to supply chain issues I can only see one thing ahead. Higher Prices for everything.
Many people are talking about deflation. What this means is dollars get taken off the table so there is a lot less of them. With lesser dollars it makes them more valuable. Does anyone really believe that the so called G-20 nations are about to stop printing money? Hardly! When Boomers start selling their stocks to raise cash the presses will roll all around the world to prop the markets and keep them from crashing. They are going to fall but maybe not as hard as they might. Don’t expect a drop in your Coco Puffs any time soon folks.
Downsizing or Shrinkflation is really a sneaky price increase. Consumers tend to be price conscious. They’re not net-weight conscious. They can tell instantly if they’re used to paying $2.99 for a carton of orange juice and that goes up to $3.19. But if the orange juice container goes from 64 ounces to 59 ounces, they’re probably not going to notice. This my friends is inflation in the sneakiest way. Less bang for your buck is not deflation in my view.
What is Deflation
In 2020 there was a deflation scare mostly cause by the so called Covid Pandemic and the shut down of the world. Let’s look a little into what exactly transpired by listening to the experts.
“The number has to be interpreted thoughtfully and cautiously,” says Stephen Reed, an economist at the Bureau of Labor Statistics.
A separate survey — the Consumer Expenditure Survey — is used to develop the weights reflecting how much we spend on what things, and the weights are changed only every two years. Usually that’s fine because the month-to-month changes in the makeup of consumer expenditure aren’t big enough to matter very much (and seasonal adjustments are used to account for changes that occur cyclically every year), but this April has been more different than usual from previous months.
If you look through the CPI release for the price categories that fell sharply, what you’ll find is a list of things you’re probably not doing much of anymore. Retail gasoline prices fell 21 percent last month as people worldwide stopped driving. Various kinds of travel services became a lot cheaper: airfares down 15 percent, vehicle rentals down 17 percent, “other lodging away from home” (read: hotel and motel rooms) down 8 percent. And during a month when Americans were far more likely than usual to sit around their homes in old sweatpants, apparel prices fell 5 percent. (All these price changes are seasonally adjusted.)
Prices have not fallen hard in every industry where sales volume is far down. Dental services did not change sharply in price, because dental offices have not been striving to fill empty dental chairs; more often, they have just closed. But where business must go on, prices have fallen. Airlines have legal mandates to keep operating; oil producers have wells they can’t easily shut off; and hotels (especially at the low end) might as well keep their doors open with skeleton staffing. In all three cases, the industries have used price cuts to move inventory.
While consumers are not enjoying the benefit of falling airfares, they are bearing the brunt of price increases on key components of the CPI. Most notably, prices for food at home rose 2.6 percent in April. Some kinds of foods had particularly large spikes in price: Eggs were up 16 percent, chicken 6 percent, and pork chops 7 percent. But even food categories not affected by coronavirus-related disruptions of meat- and poultry-processing plants tended to show at least modest price increases. Household paper-product prices rose 5 percent.
Food prices, like fuel prices, tend to be sensitive to shocks on the supply side, which is a reason why monetary policy-makers tend to look at a “core inflation” statistic that excludes food- and fuel-price changes when deciding how to set interest rates. But food and fuel prices obviously matter to consumers like any other prices, and those food-price spikes — coming at a time when the supermarket is one of the few places consumers continue to spend heavily — mean the average consumer is unlikely to be experiencing the kind of negative inflation the data appear to show.
Well after reading and looking through the deflation verses inflation it looks like a mixed bag. Certain things are cheaper like a glass of water from your tap. Everything else that I can see is rising in price. This includes housing, food, gas and travel. I don’t know if you have looked at the price of an RV lately but their not cheap. Maybe they will get cheaper tomorrow but it is unlikely unless the boomers start to get rid of those millions of second hand units. When the baby boomers start getting hit with higher taxes, higher food prices, to the moon housing cost’s they just could start selling.
It’s hard to say but who want’s a broken down second hand RV that needs a ton of repairs. I sure ain’t going to be buying one unless I have to go live out in the bush, which might just be coming soon. Deflation means everything drops in value. It would be great because yours and mine pensions checks would go a long more ways. To me this option doesn’t seem viable. Time will tell I quess but in the meantime buy Silver.