More Stealth Inflation: Shrinking Portion Department

You know how nobody (except the vast majority of Americans) considers inflation a problem? How inflation is under control, and doesn’t even exist, and wouldn’t be a threat if it did exist, and in fact needs to be even higher

This kind of sophisticated economic theory is hard for ordinary mortals to understand because our money has only lost 10.9 percent of its value over the course of the worst recession since World War II. (Does it really need to be pointed out that in times of economic stagnation prices are supposed to go down, not up?)

It’s also hard because so many distracted shoppers miss an important mechanism for increasing price: reducing the portion size and charging about the same amount. A while back I noted this phenomenon in describing how ice cream underwent stealth inflation late in the Bush Administration, when the venerable half-gallon container was disappeared and replaced with 1.5-quart and 1.75-quart lookalikes.

Here’s an even more obvious price-up. While New York Mayor Michael Bloomberg has been waging war against bigger serving sizes, one of America’s most beloved portions – the venerable 64-ounce carton of orange juice – has been downsized by 12.8 percent. And it happened more than two years ago

I’m chagrined not to have noticed this swindle for so long. All those hours of stalking supermarkets in a simmering rage of price checks, only to miss an obvious one like this! Nor is this a challenge that can be solved through the mythical “substitution effect.” This now-standard 59-ounce container is full of Florida’s Natural – which in my experience is the cheaper alternative to Tropicana and Minute Maid. (Maybe I should switch to SunnyD? Does the PCE basket consider that an OJ equivalent?) 

Last year New York Fed President William Dudley stirred up a wave of ridicule by noting that the price of an iPad had not risen. That one’s still good for a few chuckles, but it does reveal something about how your betters think. Bernankenomics will afford you the rare privilege of staying exactly where you are right now, as long as you can go without eating anything or drinking anything. In fact, do yourself a favor and don’t check the price of anything either. 

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  • Sam Grove||

    Snyders sourdough hard pretzels used to weigh 16 oz. The same size box now weighs 13.5 oz.

    Oh yeah, first!

  • Killazontherun||

    I love those things with a beer. A local Tavern makes a mix where they roast those in a lime/jalapeno pepper sauce. Great with beer.

  • Killazontherun||

    Tavern capitalized 'cause it's part of the name. The other word is Village for locals who may be curious.

  • General Butt Naked||

    I really like the Snyder's buffalo pieces, but those homemade lime/jalapeno ones sound a lot better.

  • Killazontherun||

    I'm in the three beer zone. Tempted to call my cousin to pick me up and ride me over to the pub. Unemployed, he could use a decent night out.

  • General Butt Naked||

    You should go, treat him to some wings.

  • AlmightyJB||

    That sounds awesome. They should give those out free 'cause I'm guessing that jalapeno probably increases the beer consumption.

  • Killazontherun||

    Roasted peanuts they fry and salt ocean salt with sweet paprika is the free fare they set out.

  • Killazontherun||

    toss with ocean salt and sweet paprika, I meant. Oh yeah, I'm going to have to call him to drive me over there.

  • AlmightyJB||

    I want delicious beer with yummy pretzels and peanuts too. Kinda late for me to start though since I'm going shooting early tomorrow. After the range we usually go for a few so that will be good.

  • ||

    delicious beer

    Sort of an oxymoron, isn't it?

  • General Butt Naked||

    Oxymoron no, redundant yes.

  • Bill Turner||

    You rock, Sam. Nicely done.

    Girlfriend and I were commenting on shrinking ounces and milliliters the other day. If only $0.0015 here and there jacked up our annual income by millions.

    God I love capitalism, really. Just one good idea, or five, away!

  • Nando||

    It's important Americans get the largest portion they can.
    To feed the world we need diets with smaller eco footprint, and reduce food losses and waste throughout the food system.
    But Americans don't care for the rest of the world.

  • General Butt Naked||

    So when I bought a 59 oz bottle of Tropicana (with pulp, I'm a glutton) today 5 ounces of ohjay were magically transported to some chinese assfuck's gullet?

    Jesus you're stoopid.

  • Bill Turner||

    A salute to the general. Well said.

  • General Butt Naked||

    I'm in the 5 beer zone right now.

  • Bill Turner||

    That helps. I'm pleading the 5th. We still have some rights, yeah?

  • Brutus||

    Just wait until our chocolate rations are doubled from 300 to 200 grams per month.

  • fried wylie||

    This is the kind of brave new math we need to turn this recession around!

  • anon||

    But Americans don't care for the rest of the world.

    That's right. I need all 64 ounces of the OJ that I paid for to starve some poor paki to death! 5 OUNCES AT A TIME BITCHES!

  • Bill Turner||

    What does NEED have to do with it?

  • Bill Turner||

    What does NEED have to do with it?

  • anon||

    Man, you really don't know how to read very well, do you?

    It's sarcasm idiot.

  • Bill Turner||

    Yeah, what the hell do I know?

  • ||

    What does NEED have to do with it?

    Life is a zero-sum game. If you're not killing someone else through either war or deprivation, you're not really living.

  • ||

    To feed the world we need diets with smaller eco footprint, and reduce food losses and waste throughout the food system.

    Is it ok that I eat larger portions but less portions?

    In fact wouldn't that be more ecological as it would involve less packaging?

  • Franklin Harris||

    I'm drinking something called Simply Orange now. Not sure how much cheaper it it, but it's to the point.

  • Killazontherun||

    I'm drinking a Gulden Draak 10.5% of fermentation. Delicious too.

  • AlmightyJB||

    Oh yeah, that's good stuff. I like their Orange with pineapple mixed with vanilla vodka.

  • ||

    That's the only stuff I'll drink anymore. It's so good!

  • anon||

    I'd note that another indicator of inflation is that a core i7 processor costs today about exactly what it would've cost a year ago.

    Note that most computer hardware is usually outdated in 2 years. For something to maintain the same price level indicates a serious problem; especially with the rapid pace hardware evolves.

  • ||

    Intel doesn't tend to adjust their prices, they just make something new with possibly a different price and stop selling the old line.

  • AlmightyJB||

    So I wonder what clever marketing ideas might come from the big soda ban. Bloomburg Fridays, buy one 16oz get the second on free. Or change "Xtra Large" to "Banned in NYC". Then you have the T-shirts. If my dick was a soda it would be banned in NYC.

  • anon||

    From what I understand, it won't affect packaged drinks, only unsealed drinks. I could be wrong though.

    But, depending on the wording, IF sealed containers were banned, they could just say "Well, buy 16oz get 4oz free!"

  • Bill Turner||

    Because all regulations are great, right? Sealed/unsealed drinks, now that's a distinction that all of us need. Fuck war/kinetic military action. That's all penny ante stuff.

  • anon||

    Guessing you failed reading comprehension in school. My answer was a reply, not a critique. Moron.

  • Bill Turner||

    Nah, just see anon and think, asshole. Asshole.

  • anon||

    Well, you're right, I am an asshole. Usually only because I'm right though.

  • SIV||

    Why do you hate full employment, Tim?

  • AlmightyJB||

    It's 'cause he's a racist obviously.

  • AlmightyJB||

    I remember years ago listening to this guy bitch about how we could all have everything we want 'cause the government could just print as much money as it wanted. He says, just think about it. I now wonder if that moron went on to win the Nobel prize in Economics and write for the NYT.

  • anon||

    Was his name Paul, per chance?

    Maybe Ben?

  • KWebb||

    That was the official position of a Democratic candidate for the House here in Arkansas. I think he lost the primary.

  • pyroseed13||

    Does Tim really think that this phenomenon has anything to do with Fed policies? I think it's mainly a reaction to a firm's cost constraints, as in a response to a supply shock.

  • anon||

    I think it's mainly a reaction to a firm's cost constraints,

    What, exactly, do you think causes a firm's cost constraints besides consumer demand for the product?

    IE: My customer isn't willing to pay 10 dollars for a half gallon of ice cream; they want to pay the 7 dollars they've been paying. I can only offer the ice cream to them at the 7 dollar price by reducing how much ice cream I sell them... You see where this is going.

  • pyroseed13||

    "What, exactly, do you think causes a firm's cost constraints besides consumer demand for the product?"

    I said it: A supply shock. Not sure what your point is. I think at the margin people are unlikely to notice a change in the size of the product and therefore demand lower prices.

  • SIV||

    If juice and ice cream continued to be sold in 64oz half-gallons you could hardly call that "price stability" now could you?

  • Canman||

    The square soda crackers (generic brand) that come in the square oblong box with the four seperately wraped stacks are now slightly rectangular shaped, in the same fucking box!

  • SIV||

    (Does it really need to be pointed out that in times of economic stagnation prices are supposed to go down, not up?)

    Monetary policy aside, I think it is easier to "pass through" costs when "consumers" feel they are in hard times. Was there any outcry from the population over the New Deal price floors?

  • Sam Grove||

    Also, the jugs of maple syrup at COSTCO are smaller than they used to be. About the same price or more.

  • VigDaRig||

    That really makes you wonder sometimes dude. Wow.

    www.Data-Privacy.tk

  • Ken Shultz||

    If inflation translates into higher interest rates, people will notice.

    If we see the price of gasoline spike, people will notice.

    Interesting how rationally individual people react to economic problems, though, isn't it?

    While the Krugnuts of the world are screaming that the government needs to spend more, the real economic actors in the grocery store are putting their own personal austerity plans into action.

    I suspect that's what this smaller sized stuff is about--it's giving the people what they want.

    If people want to spend less on the groceries they buy everyday, selling them smaller portions is one way to accomplish that. If they can fool people into paying more for the same amount for a while, I doubt that can last very long on its own.

  • Ken Shultz||

    If they can fool people into paying more for the same amount for a while, I doubt that can last very long on its own.

    I guess that would have been clearer if I'd written, "If they can fool people into paying the same amount for less product,...", but you probably knew what I meant.

  • General Butt Naked||

    Ken, I'm not being a smartass or anything but I don't know what you're getting at here. Are you saying that people wanted to save money so companies started selling them less product for the same amount of money, and that lets people spend less on groceries? I just don't see it, man.

  • ||

    I get what he's saying. People want more bang for their buck. They expect prices to be higher, so when they see that prices haven't changed for the "same sized" product, they don't have a problem with it. And they won't notice that they are making 5-10 more trips to the grocery store/yr than they used to.

  • General Butt Naked||

    I thought that at first, but that seemed so obvious as not worth mentioning. So I figured Ken was making it more complicated and convoluted than it had to be and something got lost in the process.

  • ||

    You may be correct. Ken writes long posts(as do I while intoxicated). But I think he is usually trying to make a simple point.

  • General Butt Naked||

    Someone put him on -verbose.

  • ||

    Is that code for "you should use reasonable"?

  • ||

    Also, I think this is the first instance of Butt Naked vs Butts Wagner. Truly, a landmark event in Reason HnR commentator history.

  • fried wylie||

    Someone put him on -verbose.

    Is that code for "you should use reasonable"?

    No, you have to edit the commandline options in the script that launches him. Consult the man pages for csh, bash, or whatever shell your system uses.

    If you have problems using man pages, try xman. Failing that, google it.

  • Ken Shultz||

    It isn't about being verbose; it's usually about answering people's questions before they're asked.

    It's a weird format, this internet thingy.

    You tell people you think the Ground Zero Mosque Imam is a jackass? They think you're all in favor of the Cheney Administration.

    You tell people global warming might be something to worry about? They assume you want an international treaty to crush our economy.

    Often, it's about preempting stuff. Other times it's about being properly understood--so someone can point out where I'm wrong. I've learned a lot of stuff around here over the years, and usually it's from people pointing out--not just that I'm wrong, but why I'm wrong.

    How are they supposed to tell me why I'm wrong if they don't know why I think what I think?

    If somebody wants to tell me why I'm wrong about smaller portions being one way companies give their customers what they want, I'd really appreciate it.

    Sheesh.

  • Ken Shultz||

    Eventually, I would expect prices to fall to match the new proportion sizes.

    In the meantime, if shoppers want cheaper hot dogs, and hot dog manufacturers start selling hot dogs that are smaller than they used to be, then the hot dog manufacturers aren't necessarily ripping their customers off. They're giving them what they want.

    If people will accept smaller hot dogs if it means they're cheaper than they would be otherwise, then in this environment, that's the industry serving its customers. That's the way it should be.

    If some other manufacturer wants to start differentiating its dogs by making them bigger than the competition--they're perfectly free to do so, and that's what they will do eventually. Right now, though, if different brands are competing mostly on price rather than size per serving, then the sizes should be smaller.

    Making smaller dogs might get them some extra bang for their buck initially, but over time, that advantage will disappear.

    There's probably ten different brands of dogs at your local supermarket, all competing for your business. They're all sitting next to each other on the shelf.

    If portion size matters to you, you'll figure it out.

    That's all I was trying to say.

  • amelia||

    Ballpark Franks plump when ya cook 'em! Ballpark Franks!

  • 0x90||

    I'll sometimes grab Lunchables at the gas station if I'm in a hurry...did that a couple of weeks ago and noticed that the meat and cheese had been roughly halved in weight, with a small protrusion having been cleverly molded into to bottom of the unchanged-in-size package. Wiki says the slice thickness was cut by 60% in March.

    They were already overpriced before, in my book. What I wondered, though, was: how long does it take kids to notice something like that and complain? The packaging is semi-opaque, and I didn't notice anything had changed until it was already opened.

  • buddyglass||

    10.97% over 5 years (2007-2012) is 2.1% per year. That's historically normal. Compare to the preceding five years (2002-2007) in which the cumulative inflation was 15.25%.

  • Ken Shultz||

    This is where I'd usually point to the spread between the 10 year treasury and the 10 year TIPS, but with all the turmoil recently?

    The 10 year treasury is bumping up against a record low, and the 10 year TIPS is trading at a negative yield.

    When everybody's so scared to be in any other currency to the point that they're willing to pay the government for the privilege of lending it money, it's hard to look at the spread between rates and draw any conclusions about inflation...

    By the way, low interest rates are one of the reasons so many people were skeptical of there being a big pull back in real estate development, too, circa July of '07.

    You'd expect interest rates to go higher before people wouldn't be able to finance new purchases, and the restricted pool of available buyers would make the value of housing tumble, but when the mortgage originators started lending to people they never would have lent to before, it changed the way to look at that... That sort of qualitative aspect of the borrowers didn't really show up in the interest rates either. And even when the credit markets freaked out, the interest rate didn't budge much--it's just that hardly anyone who hadn't gone public lately could get the quoted rates.

    Making portion sizes smaller, like ignoring qualitative differences, I'm sure that can mask inflation, too.

  • buddyglass||

    Maybe there are reasons inflation was lower than it could have been. I won't dispute it. But when inflation over a five year period is significantly lower than over the immediately preceding period it seems more than a little disingenuous to portray it as uniquely high.

  • ||

    Inflation will not be a problem as long as the US Dollar is considered a safe bet. I can agree to this. The question remains, how long will the US Dollar remain a safe bet? Nobody knows the answer to this, and therefore, spending will remain low. Once people no longer trust in the US Dollar, spending will increase, which will drive inflation as people look to rid themselves of the US Dollar. Those signals will reach the general US population in the form of significantly higher prices, which will drive inflation above the 2% number that we keep getting from the feds. The question remains, how long will the US Dollar be the premier currency in the world? I don't know the answer to this. But population wise, the Euro(until Mexico and Canada are fully folded into the US economy), yuan, or whatever India uses is the best long term bet. And of course, it depends on what those countries decide to do with their currencies as well. Uncertainty will reign supreme until a significant sized economy decides to stop promoting absolute wage/price increases within that economy and base their inflation/deflation on something tangible, like precious metals. Of course, the ideal free market solution is competing currencies, which will free up markets worldwide to create a true world market that does not depend on government decisions for the amount of currency available.

  • ||

  • ||

    barfing squirrels

  • JeremyR||

    No, no, you see, they're just finally adopting the metric system.

  • realistic_01||

    I wrote an email to Florida's Natural when they did this. They responded that their research showed their customers would rather pay the same price for their product than pay more. I replied to them that obviously it wasn't the same price as they were slipping in the shrinkage that most consumers wouldn't even notice for some time, if ever, unless it was pointed out to them, that I thought they were deceitful in their business practices, and that I wouldn't buy their product anymore. Buy fresh oranges. I don't see how they can "shrink" the product/price as oranges are bought per pound. Read what happens during the juicing process too, it kind of grosses me out how the stuff sits in huge tanks for long periods with "natural flavors" added to make it taste the same each time, and has food coloring added.

    Ritz now sells less than 16-ounce boxes of their regular crackers too, so I quit buying those as well.

  • GroundTruth||

    I called Tropicana about this same thing about a year back, and got that same song and dance that their research indicated that people preferred smaller containers to a rise in price. This is absurd! I drink this stuff by the glass, not their mythical portion size, and my glasses are the still the same size. All this does is allow them to keep the per container price constant, while requiring more packaging and handling per unit volume.

    These guys are in collusion with the Fed to support the politicians' claims about "low inflation".

    If I were farther south, I'd grow my own!

  • fried wylie||

    Ritz now sells less than 16-ounce boxes of their regular crackers too, so I quit buying those as well.

    "I didn't pay with broken money, I expect unbroken crackers!"

  • amelia||

    I guess you quit Jimmy Dean Sausage too then?

  • Nando||

    Pot is illegal, yes. But everyone smokes it at concerts. So when pot is smoked outside an arena at a concert, why do the cops turn a blind eye?

  • Zuul mothafucka Zuul||

    Because cops are corrupt sons of bitches? Why are you trying to lecture libertarians on the war on drugs?

  • Brendan||

    I used to think that the cops understood that people smoked pot at concerts sometimes and were overlooking it.

    Now I think it revolves around overtime. As far as I know, cops providing security at private events like concerts, parades, etc. are on paid overtime with the funding come from the event.
    If people start getting arrested, they won't be coming back to these events, other people will get a bad taste in their mouth and they won't come back.

    This results in lower ticket sales which means fewer people, which then means fewer 'off duty' cops hired on overtime for a cake job. Going further, if enough people are pissed or the event promoter gets a bad taste in their mouth, they may hire a private security firm and not the police.

    In other words, cops enforcing bullshit laws at recreational events might have to face the forces of the free market.

  • ||

    "'Hey I'm sitting on cash, and that's probably not a good idea'" - Krugnuts

    What's wrong with sitting on cash? In any scenario. If I don't want to participate in the "growth" of the economy, why should that matter to anyone else?

  • ||

    Just to reiterate my point:

    GDP rules everything around me, GREAM, get the money, dolla dolla bills ya'll

  • fried wylie||

    What's wrong with sitting on cash?

    Polyurethane foam upholstery has better endurance and firesafety.

  • West Texas||

    Anybody that hasn't downsized yet already wins my business by default. If I have a choice, I'll always buy the correct size out of principle.

    Trader Joes and Minute Maid both still sell 64oz orange juice.

    Costco Ice Cream is still 1/2 gallon (although you have to buy two). Bluebell Ice Cream in Texas is also still 1/2 gallon.

    But I can't find a goddam brand in Massachusetts that's still 1/2 gallon in the grocery store.

  • ||

    The only ice-cream that hasn't been downsized here in MA, as far as I know, is Ben Jerry's, which only comes in pints.16 ounce pints, not the 14 ounce ones favored by Haagen-Dasz (or however those fake-European assholes spell it).

    I have a theory that the reason lefties don't believe in inflation is because the only ice-cream they buy is the annoyingly preachy (but now owned by a big corporation!) Ben Jerry's. I've actually been thinking about that for a while now.

  • Ted S.||

    If you moved to the hellhole that is western MA, you could cross the border into New York and pick up Stewarts store-brand ice cream, which is still sold in 2-qt packages, a fact they proudly advertise.

    Of course, something about the business seems like a 1970s time warp, right down to the typography which I think hasn't changed since I was a kid.

  • ||

    Berkshire County, dude. They actually sell Stewarts store brand in the supermarket here, but only gross flavors like root-beer float, and only pints, so I could be wrong because those may be 16 oz pints, too. I think than Cumby's store-brand is also still the correct size as well, now that I think of it.

    Where I live, folks drive to Stewarts in New Lebanon, NY for NY lottery tickets, and Stewarts in Pownal, VT for cigarettes.

  • Ted S.||

    Oh, God, Cumberland Farms. They always looked even more downmarket than Stewarts from the outside, at least when I was growing up. I didn't even know they changed their colors from that hideous blue/orange combo.

  • fried wylie||

    right down to the typography which I think hasn't changed since I was a kid.

    Imagine the work their graphical designer put into maintaining that into the digital era.

  • Ted S.||

    Come to think of it, I might be mistaken. I'm having visions now of Stewarts using the same font that the Mary Tyler Moore show used back in the 70s. But the advertising and the stores all still remind me of a hideous past; one which includes working class people drinking Genesee beer at picnics and other such horrors.

    [shudder]

  • ||

    120 roll bags of Pizza Rolls are mind blowingly cheap at Wallmart.

    They cost the same as a 60 roll bag at other stores.

  • ||

    Is your real name Harry S. Plinkett?

  • db||

    Long John Silver's fish portions are noticeably smaller now than they were even at the end of last year, but sell at the same price. The chicken is about the same, I think.

  • Ted S.||

    You eat at Long John Silver's?

  • db||

    Religiously.

  • ||

    A can of tuna now contains 5 ounces of tuna; it's crept down from 7 ounces in quarter-ounce increments over the last 2 decades or so. For whatever reason that's the one that drives me crazy.

  • fried wylie||

    For whatever reason that's the one that drives me crazy.

    Because opening and draining more cans is a smelly, messy, pain in the ass.

  • BakedPenguin||

    This. And for whatever reason, the smaller cans are less expensive than the big ones on a per ounce basis.

  • ||

    I like the 'Value Size' items that are twice as large, and for only twice the price!

  • ||

    Those 16 oz packages of kielbasa, etc have all moved down to 13.5 or 14 oz in the last 6 months. But, hey! They held the price constant.

  • fried wylie||

    Lucerne, 1gallon fudge marble, ~$1.40/qt.

  • robc||

    You dont have to worry about defining a damn basket if you realize inflation is monetary.

    Of course, you have to define a M to use, so a similar but easier problem.

  • Old Mexican||

    We could measure the inflation level in Mexico by tasting how much water the milk bottlers had added to the end product.

  • Tulpa the White||

    I thought the consensus at Reason was that shrinking sizes of foods was a Michelle Obama-led conspiracy.

  • txgypsy||

    hell, this has been going on since the early 2000's..... I remember when i first noticed that large size bags of beef jerky at the convienence stores had shrank in weight content;, but not bag size.....
    Look at the vending machine chips at your job.......remember when they used to be .40 cents a bag???..........now the are .70 cents and the bag is smaller,....when i pay damn near a dollar for some doritos, I WANT MORE THAN 4 FUCKING CHIPS IN THE BAG!!!!!!!!

  • Bruce Majors||

    This is so obviously true someone should start a food related inflation website or blog for anecdotal reports and analysis.

    Restaurants that used to supply hearty fare with entrees with bread baskets and mut.ple side dishes now provide one side dish and a two small rolls.

    Today I ordered what appeared to be a pork chop with a side of sauerkraut and another side of my choice. I got a small dish of sauerkraut with some chunks of pork chop in it heated in a dish, with my side.

    The most obvious case is pink slime. It was not approved for humans until 2001 by the Dept. of Ag. So hamburgers from 2000 which were higher quality meet and pink slime burgers today are I suspect considered equivalent, as both Dept Ag. approved, when the Bureau of Labor Statisics computes inflation rates.

  • amelia||

    So glad I stopped eating in 2003.

  • anon||

    Shut up, Kate Moss.

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