ICYMI, inflation — aka the increase in the cost of everyday items over time — is at a 31-year high. And higher prices are only one way it can hit you. Meet inflation’s sneaky cousins: shrinkflation and skimpflation.
Unfortunately, you should get to know these two:
Shrinkflation is when a product's size gets smaller, but the price stays the same. Some recent examples: Royal Canin made its cat food cans smaller, family-size Tillamook ice cream containers went from 56 ounces to 48, and Walmart-brand paper towel rolls shrunk from 168 sheets per roll to 120. All without a price drop to compensate for the difference.
Skimpflation, a term coined on NPR’s "Planet Money," happens when companies cut corners on labor and services while still charging the same prices. That might mean having to wait longer for your coffee because the shop is short on baristas. So your experience isn't as great, but the cost doesn't change. Other examples: airlines cancelling flights and responding with painfully slow customer service, Domino’s pizzas taking longer to be delivered, and restaurants foregoing physical menus.
Inflation happens for a few reasons. For one, labor shortages and supply chain delays are making it harder to get items from point A to B. Read: supply for a lot of items is low. Climate change isn't helping, making resources more scarce and expensive. And the economic recovery means Americans are opening their wallets faster than companies can ramp up production.
All of that adds up to higher prices. But some businesses look for ways to cut costs without having to charge customers more — and hope you don’t notice.
There’s not much you can do to stop the three ‘flations. But here are some ways you can prep your wallet (and your patience) to handle them.
Tune up your budget. If it's still based on old prices, you’ll need to adjust for higher costs. First, make sure you have room for all the necessities and your top money priorities (hey, savings goals). Then look for ways to save like these.
Be a savvy shopper. Consider swapping name brands for generic or store brand versions, which are 25% cheaper on average. And compare prices between stores. A tool like Basket or MyGroceryDeals.com can help. Also keep an eye on the cost per unit (ounce, pound, etc.) of products, rather than just the overall price tag, to make sure you're getting a good deal.
Earn rewards. The right credit card can help you earn points or cash back on categories where you spend the most (gas, groceries, restaurants). But if you’d rather avoid plastic (studies show paying in cash helps you spend less anyway), you can use an app like Honey, Rakuten, or Ibotta to earn money back for shopping with certain retailers. No strings attached.
Power up your savings. Keeping your money in high yield savings accounts can help keep up some of its purchasing power. Even better: investing can earn you higher returns and help you beat inflation.
Adjust your expectations. Because longer waits and worse service might be the new normal. Plan ahead when possible. Think: calling a ride to the airport earlier than you think you need to.
Inflation is high and coming at you in a few different ways. Being smart about spending, saving, and investing can help you and your wallet beat it.
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Skimm'd by: Casey Bond, Liz Knueven, Kamaron McNair, Stacy Rapacon, and Elyse Steinhaus
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