LONDON (Parliament Politics Magazine) – Skimpflation is a known term used in the US but is quickly gaining popularity in the UK. Alan Cole, a writer at Full Stack Economics and a former senior economist at the joint economic committee of the US Congress, explains “skimpflation is when consumers are getting less for their money.” Skimpflation, as opposed to conventional inflation, occurs when consumers pay the same amount for goods but have a lower quality.
According to Cole, “having to wait longer for things” is the most typical example. Delivery delays are lengthy if you’ve lately ordered furniture or appliances. That lapse in timeliness represents a reduction in quality.
We are all aware of what inflation entails because of the current crisis: the price of everything is rising, sometimes at an alarming rate. Additionally, there are many instances of shrinkflation, which occur when a corporation reduces the size of a package of chocolate or chips while maintaining the same price.
But even though it may not be as obvious, once you start looking for skimpflation, you will find it everywhere. It happens at the grocery store when you run into someone stocking shelves because the more expensive night shift labour has been eliminated, or when your favourite brand is gone because the selection has been scaled back to decrease warehouse expenses.
When you arrange a vacation only to have your flight cancelled or discover you now have to pay for your meals and drink on board, or when you receive disappointing new clothing that wobble after one wear. The only way to protest or try to get your money back is then through a web chat with a being that may or may not be a person.
The phrase first appeared in the Planet Money podcast produced by US radio network NPR in 2021. Consumers “pay the same or more for services, but they kind of suck compared to what they used to be,” the report claimed, describing it as a “stealth-ninja kind of inflation.” The Magic Kingdom for example, where visitors were walking almost a mile in hopes of getting into Disney World and Disneyland because the tram from the car park was out of service.
In all fairness, the pandemic’s effects and the economy’s precarious position make this a challenging period for both firms and customers. For every large company like Disney with enormous money, there is a little business that is fighting to make it. When things returned to normal after Covid, they were impacted hard by rising energy and material costs as well as staff shortages. As consumers struggle with growing living expenditures, businesses must decide whether to pass along their rising costs to customers, suffer a loss of revenues (if any), or switch out expensive components or services for less expensive ones.
Cole believes that the official numbers understate the severity of inflation.
Skimpflation, according to him, is more common when it’s difficult to make goods or when the global economy is suffering. Typically, as the world becomes wealthy, one can notice that goods and services are becoming more fancy. However, the Covid-19 pandemic reduced productivity and made everyone poorer in numerous areas, pushing them to make cuts.
He adds that it is more prevalent in ‘seller’s markets’ like today. In such an atmosphere, there is greater financial flow across the economy, and there are numerous willing consumers of the limited goods and services. This is a contrast compared to an economy like the one that existed from 2008 to 2011, where buyers with cash appear to have the upper hand in transactions and sellers or workers appear to have little negotiating power. In the years 2008 to 2011, money was not as plentiful and the world was a “buyer’s market” that is if one could afford to spend.
Although skimpflation is a new concept, Cole contends that economists should take it seriously. If you notice a company lowering product quality for the same price, that implies we are in a  “you get less for your money” regime. This is where the power lies in the hands of the sellers.
