Tags: consumer goods | inflation | price stability

Less Cereal in the Box: The Secret Inflation of Goods

Less Cereal in the Box: The Secret Inflation of Goods
(Mikessssss/Dreamstime.com)

By
Friday, 03 May 2019 11:26 AM Current | Bio | Archive

Here is a WSJ headline of April 29, 2019: “S&P jumps 17% this year, as economy picks up without driving up prices.” As a student of the U.S. stock market I always wondered why major companies were able to report a healthy profit increase, yet admitted to no, or only meager, increases in sales. What gives?

In our era of relative price stability, a constant sales volume with rising profits can only mean one thing: That packages of consumer items contain less consumable goods.

Have you ever read the label on a cereal box? You will find out that the contents shrank from 35 ounces of last year to only 32 ounces this year. This is a hidden price increase of 9.3% even thought the sales price and the box size remain the same.

If you buy a tube of tooth paste you will discover that the carton and the marked price is the same as last year. However, if you pull the tube out of the box, you find that now it is ½” shorter than last year’s 5” long tube. Again, a hidden 10% price increase. Or, take a bottle of Aspirin. Last year the bottle was half filled with pills and the rest was cotton fiber. Today you will see 10% more cotton and a like amount of fewer pills.

Consumers may not realize immediately this creeping goods inflation. However, in the end, a cereal buyer, for example, will find that he has to buy 109 boxes of cereals during the year instead of only 100 in order to satisfy his or her family’s needs.

While this hidden pricing strategy will please company shareholders, it does hurt the pocketbooks of consumers; a hidden inflation not counted in the official Government inflation figures.

Unfortunately, this effective decrease in living standards affects all of us.

Corporate Chieftains have to realize that we are in an era of limited, or even zero growth, despite the hype about automation and artificial intelligence. They can’t continue to fake profit growth by cheating consumers. After all, if this continues, we will eventfully find zero toothpaste in the tube!

Here is another reason President Trump dislikes the Chinese: They just announced a trade surplus of 3.1 trillion dollars! Compare that to our $0.6 trillion trade deficit this year alone adding to a total external trade deficit of $6.37 trillion U.S.

Hans Baumann is a licensed engineer in four states and a member of Sigma Xi, the Scientific Research Society. He is an adviser to the dean of the University of New Hampshire Business School. Dr. Baumann has published manuals on valves and was a contributor to many works including the "Instrument Engineers' Handbook" and the "Control Valves Handbook." He has also published several books on business management and German history, including "Hitler's Escape," which suggests that Adolf Hitler did not commit suicide and survived World War II. In his latest book, "Atomic Irony" he proves that the Hirshoma Atom Bomb contained captured German Uranium. For more of his reports, Go Here Now.

© 2019 Newsmax. All rights reserved.

   
1Like our page
2Share
HansBaumann
In our era of relative price stability, a constant sales volume with rising profits can only mean one thing: That packages of consumer items contain less consumable goods.
consumer goods, inflation, price stability
508
2019-26-03
Friday, 03 May 2019 11:26 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved